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4 factors that can make your motor insurance premium costlier

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The ever-ascending inflation rate has made all of us cut corners wherever possible to keep up with our essential expenses – one of them being our vehicle and its upkeep. There are certain costs associated with the vehicle that cannot be avoided, like – fuel, servicing, and motor insurance. Irrespective of your usage of the vehicle, motor insurance is a mandate by law that the vehicle owner has to comply with. Aside from being a lawful mandate, motor insurance is a thoughtful investment to secure one of your most prized possessions. 

Accidents are far too common on Indian roads and motor insurance is your shield against the damages arising out of them. Third-party insurance is a legal mandate, so its purchase is not optional. Coming to own damage cover, new car owners have to abide by the law of mandatory 1-year comprehensive+3 year TPI policy at the time of purchase. This essentially means that the owner only has to buy a Standalone Own Damage cover for the second and third years. While motor insurance is an essential expense to protect you and your vehicles, you can always find ways to make it less costly than it has to be.

Let’s encapsulate some of the factors that can make your premium costlier.
Not utilising the NCB efficiently

NCB or no-claim bonus is the key feature in your motor insurance policy that not only helps you bring down your premium but also encourages safe driving. Rewarding vehicle owners for every claim-free year, NCB can help you get up to a 20% discount on your first year of no claims, 25% for two years, 35% for three and 45% for four consequent years if they make no claims. However, by not utilising the NCB efficiently, you stand to lose this discount, and therefore, may end up paying a higher premium than you need to.

Once your vehicle is out on the road, damages are almost inevitable. But make sure you don’t make a claim for small damages. Instead, pay for the repair out of your own pocket in such a case. If you make a claim, you’ll end up losing the entire accumulated NCB which might cost you higher in the long run. Apart from this, in case you change your vehicle or port your insurer, remember to transfer your no-claim bonus if you want to continue paying a lower premium.
Rushing into buying insurance from the dealer
Dealers often cash in on your excitement to take your brand new car home soon after the delivery. For a long time, car insurance has come bundled with the car for most buyers. However, might we ask you to hold your excitement just a bit longer and spare some time for insurance research? This is a critical component of your purchase that will continue to have a long-term impact on your rides, hence, do not rush into buying the first deal you get. Dealers are not experts in insurance since that’s not their primary area. Also, they have a tie-up only with certain insurers which limits their subject matter expertise and your choice of options. Further, they aim to make a profit out of this tie-up, and hence, might offer you a deal costlier than you actually need.
Not comparing and buying online
In ways more than one, the digital shift is quite evident across all industries – with insurance being no exception. Since motor insurance is a mandate, Covid has further propelled its online purchase as a convenient and safe means of transaction. But the benefits of buying motor insurance online go beyond this. The buyers can access innumerable policies online, and can easily compare their prices, features, add-ons and everything they need in one place, all at their fingertips. This way they can customise their policy as per their individual needs and save more on the premium. Also, an online distribution channel is always more cost-effective for both the buyer and the seller, thereby bringing down the premium for the policyholder.
Not understanding the impact of deductible 
Often buyers don’t know the impact deductible can have on their policy or premium. Deductible, or voluntary deduction, is an expense borne by the vehicle owner when they make a claim. It’s highly important to choose your deductible wisely. It might vary from consumer to consumer. In case you are an experienced driver who doesn’t feel the need to make a claim too often, you can choose a higher deductible which will bring your premium down. On the other hand, if you keep it zero, you will get the entire claim amount but end up paying a higher premium.

(By Ashwini Dubey, Head-Motor Renewals, Policybazaar.com)

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