How to Reduce Car Insurance Premium

Car insurance premiums are getting increasingly expensive, especially after the Indian government has made thirty-party insurance cover mandatory for cars to run on the road. This has made ‘the best insurance at the lowest premium’ a thing of the past.

Read more


Third-party rates expected to increase* soon. Renew today!


Third-party rates expected to increase* soon. Renew today!

Stay home & renew car insurance in 2 minutes

No documents required
Get Car Insurance starting at only
Other options
Get Car Insurance starting
@ only 2072/year*
  • Save up to 85%* Lowest Car Premiums

  • 20+ Insurers To Choose From

  • 51 Lakh+ vehicles insured

*TP price for less than 1000 CC cars. All savings are provided by insurers as per IRDAI approved insurance plan. Standard T&C apply.

Top Plans
Cashless Garages
Plan type
Starting from
₹ 2,727
Check premium
Claim Advantage
Self-Video Claims
Reimbursement Within 7 Working Days For Non-Cashless
Cashless Garages
Plan type
Starting from
₹ 2,757
Check premium
Claim Advantage
Self-Video Claims
Reimbursement Within 7 Working Days For Non-Cashless
Cashless Garages
Plan type
Starting from
₹ 2,868
Check premium
Claim Advantage
Spot Claims Upto Rs. 30,000
Repair service at select cashless garages
See more plans

Above-mentioned prices are for a 7-year-old Maruti WAGON R AVANCE LXI (998 CC) registered in Gurgaon and 15 days before expiry of previous policy

Ever wondered how to reduce car insurance premium? Here are some ‘How to keep car insurance low’ tips:

Compare Car Insurance

Before purchasing car insurance, always compare the benefits and quotes offered by various insurance companies/agents. Most insurance companies have a website in addition to numerous online insurance comparison sites where you can compare car insurance premium rates charged by different companies. These online insurance distribution channels are cheaper than the conventional method, and they also help you get the best car insurance premium rates conveniently.

Also, if you have been taking the same policy for the same car for several years, it makes sense to try other insurance companies, as you may get attractive discounts and still lower car insurance premium rates.

Beware of car insurance firms who claim to offer 'free' insurance - this is usually free only for the first year and it cannot be customized. Also, keep in mind that a ‘no frills’ policy is usually the cheapest because the premium goes up proportionally when insurers include add-on features. Most importantly, make sure you’ve read the policy fine print carefully before purchasing it.

Be Wise with the Coverage

A car insurance policy is typically a pre-defined set of benefits. Nevertheless, if your policy permits, then opt out of features you do not really need. This helps lower the car insurance premium to some extent.

You May Also Like: Typical Ways To Reduce Car Insurance Premium

Watch Those Deductibles

Increasing deductibles or voluntary deduction can reduce your car insurance premium. A deductible is the out-of-pocket amount paid by the policyholder when making a claim. While opting for deductibles, it is better to pay much comfortably rather than going overboard.

If your deductible is zero, then you will receive the entire claim amount in the case of an accident, but the premium you regularly pay will be very high. A higher voluntary deduction makes sense in two cases – one, if you are an extremely safe driver, which significantly lowers the chances of an accident; two, if you have not claimed insurance for a few consecutive years.

Don’t Think Small

While it is true that the core purpose of car insurance is to save expenses incurred for repairing a damaged vehicle, making very small claims could work against this objective. Even for the smallest claim you make, you lose the distinct advantage of the No Claim Bonus (NCB) – the bonus accrued for every consecutive ‘claim-free’ year over the policy term. The NCB can lower your car insurance premium up to a maximum of 50%; so, your next year premium sees a 50% dip.

The claimed amount is sometimes lesser than the total processing charge and the loss of NCB. The wisest way to use your insurance is get small repairs at local workshops. The dual advantage is that the expenses are lesser and the NCB is saved too. Keep in mind that if the repair amount is lesser than the NCB, then you can potentially accumulate, refrain from making a claim.

From Old to New

An advantage of not making a claim is that the bonus accumulated is transferable to the new car you purchase. It is, therefore, wise to retain the insurance in your name even after selling your vehicle and ask the insurer to give you the no-claim certificate.

You can reserve this bonus even if you are not immediately buying a new vehicle. Whenever you buy a new car, transfer the existing policy to it and carry forward the no-claim bonus accrued over the years. This will help you reduce the car insurance premium rate for the new insurance policy.

Stay Safe

Installing safety features/anti-theft devices like locks for the steering wheel and gear, air bags, anti-theft alarms etc. could fetch you a 5% discount on your premium. Further, people linked with associations like Automobile Association of India (AAI) or the Western India Automobile Association (WIAA), can get special benefits and discounts on premiums. These associations are empowered under the Motor Vehicles Act and Rules and the members therein are deemed as ‘safe drivers’.

Avoid the Frills

Car modifications like adding alloy wheels, spoilers, etc., and expensive gadgets like automotive night vision, ultrasonic sensors, etc. may lead to a higher premium. Hence, such modifications and gadgets should ideally be avoided if you wish to keep your premium low. However, if you still want to introduce modifications at the cost of higher premiums, notify your insurer because if you don’t, your insurer may invalidate your insurance.

Dig Bigger Discounts

Based on the policyholder’s age, driving record, profession, and various other criteria specified by the insurance company, the policyholder could avail car insurance premium discounts.

Also, check with your insurance provider whether you qualify for a discount if you have covered parking for your car. In addition, discounts on car insurance premiums can be availed if you are a member of organizations like the AAI or the WIAA.

It Pays to be Loyal

When people have multiple insurance policies (in any category) with the same insurance company, and they approach the same provider for a car insurance policy, the provider offers a lower car insurance premium as a loyalty reward.

Remember the Lapse

Once your car insurance policy lapses, you may not qualify for NCB that you would otherwise have been eligible for. While buying your policy, make a note in your organizer or ask your provider to send a reminder before the policy expires, so you renew your car insurance policy without fail.

Written By: PolicyBazaar - Updated: 26 June 2021
You May Also Like
  • Transferring Car Insurance from One Person to Another

    Transferring Car Insurance from One Person to Another An integral part of selling a car, for both the buyer and the seller, is ensuring a successful car insurance transfer to the new owner. But sadly, most people have...

    read more
  • 9 Secrets That Your Motor Insurance Provider Won’t Tell You

    9 Secrets That Your Motor Insurance Provider Won’t Tell You Due to the dangerous driving conditions, it is compulsory to have third party insurance for every vehicle plying on Indian roads. It ensures the overall saf...

    read more
  • Money Saving Advice for All Car Owners

    Money Saving Advice for All Car Owners After a dream home, a dream car is your second-largest purchase that you make in your lifetime. But the expense does not cease when you drive off the car dealer's lot. Read mor...

    read more
  • Difference Between Comprehensive Insurance and Third Party Insurance

    Difference Between Comprehensive Insurance and Third Party Insurance Comprehensive insurance is insurance coverage that pays for the repair or replacement of vehicle damages resulting from an incident. Comprehensive ca...

    read more
  • Types of Motor Insurance

    Types of Motor Insurance The word Motor broadly covers a lot of classes of vehicles plying on the roads. These may be two-wheelers like scooters and motorbikes, three-wheelers or four wheelers like private cars, jeeps, ...

    read more

Find similar car insurance quotes by body type

Hatchback Sedan SUV MUV
Car insurance save up to 85
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Calculate your car IDV
IDV of your vehicle
Calculate IDV
Calculate Again

Note: This is your car’s recommended IDV as per IRDAI’s depreciation guidelines.asdfsad However, insurance companies allow you to modify this IDV within a certain range (this range varies from insurer to insurer). Higher the IDV, higher the premium you pay.

Policybazaar lets you compare premium prices from 20+ Insurers!
Compare Prices

Why buy from Policybazaar?

  • 24x7 Claims Assistance
  • Cashless Assurance
  • 3-Day Repair Assurance
  • Free Pickup & Drop
  • Self Video Claims
  • Windshield Claims At Home
View Plans

Car insurance articles

Recent Articles
Popular Articles
Manual versus Automatic Car Insurance - Effect on Insurance Premium

12 May 2022

When it comes to transmission systems in cars, there are two...
Read more
Everything You Need to Know About Private Car Insurance

09 May 2022

A car insurance policy is not just a mandatory requirement but...
Read more
All You Need to Know About CNG Car Insurance

06 May 2022

If you are planning to get a CNG kit fitted in your car or...
Read more
Can I Claim Insurance for Car Scratches in India?

02 May 2022

Yes, you can claim insurance for car scratches and dents in India...
Read more
How to Buy a Car Insurance Policy Without Paying a Commission?

02 May 2022

While buying a car insurance policy, a broker or an agent helps...
Read more
Car Depreciation Calculator
If you are looking to purchase a new car or planning to sell your existing one, it is important to know how...
Read more
Transferring Car Insurance from One Person to Another
An integral part of selling a car, for both the buyer and the seller, is ensuring a successful car insurance...
Read more
Check Car Insurance Status Online on Parivahan Sewa/ RTO?
In India, buying car insurance is a compulsion for every car owner. It doesn’t matter if you are an excellent...
Read more
Getting Your Duplicate Car Insurance Policy is Easy-Here’s How!
Losing important documents, such as your car insurance documents, can be daunting. In such a state of affairs, the...
Read more
Multiple Ways To Check Your Car Insurance Status Online
All insurance companies in India now have a digital presence. It not only makes it easier to buy insurance online...
Read more