9 Easy Tips and Tricks To Cut Down Your Car Insurance PremiumPosted on: December 2, 2020, by : Rakesh Sashmal
Everyone desires to own a car of their own. Some people buy a car out of necessity and some purchase it for luxury. But nobody gets to choose when it comes to buying a car insurance policy. Whether you prefer it or not, everyone needs to have a motor insurance policy for their cars. The simple reason behind this is the mandatory requirement for all car owners to buy car insurance with at least third party cover their four wheelers under the Motor Vehicles Act, 1988. People who are found violating this law will be subject to punishment.
Many people consider car insurance an unnecessary expense. Contrary to the belief, buying the best car insurance policy is one of the wisest decisions that you can take for the betterment of your vehicle. If money is an issue, you can stay assured as not all motor insurance policies are expensive. In fact, the cost of a car insurance policy can be substantially reduced with the help of some easy tips. But before you know these tips, it is important to know what affects a car insurance premium.
Factors that Affect Car Insurance Premiums
The premium for a car insurance policy is determined with the help of several factors. These factors help a motor insurer to judge the risk associated with your car. The greater the risk, the higher a car insurance premium gets. Take a look at some of the common factors that affect car insurance premiums:
- Age of the Car – Older cars have more probability of giving troubles than brand new cars. Hence, car insurance premiums shoot up with an increase in the age of the car.
- Make & Model of the Car – Expensive cars as well as high-end models of a car are a greater liability for an insurer. This is because the cost of repairing or replacing its parts are higher in luxury or high-end cars. Thus, car insurance premiums are higher for luxury or high-end cars.
- Type of Car Insurance Coverage – Comprehensive insurance provides greater coverage to a car as compared to third party insurance. As a result, the cost of car insurance is higher in the case of comprehensive cover.
- Engine Capacity of the Car – Cars with greater engine capacity pose a higher level of risk to the insurer. This is why the car insurance cost is more for cars with a higher engine capacity.
- Location of the Car – The probability of a car getting damaged is higher at certain places, such as densely populated cities, highways, mountains, urban areas, places with a higher record of crimes, etc. If you stay at a high-risk area, you will be charged with a higher car insurance premium.
- Claim History – People who have a poor claim history is considered a greater liability by a motor insurer. Besides, not making any claims in the past year helps the car owner to earn no claim bonus (NCB) which reduces their car insurance premiums. Thus, if you have a poor claim history, you need to shell out more money for car insurance premium.
- Car Modifications – If any modifications have been made to a car, there are chances of incurring a greater loss in case the vehicle is damaged. Hence, a car with modifications attracts a higher car insurance premium.
9 Easy Tips to Reduce Your Car Insurance Costs
Car insurance premiums are not rigid. You can buy the best car insurance without overshooting your budget. All you need to do is follow a few easy tips that can help to reduce your car insurance premiums. Take a look at nine simple tips that can easily cut down your car insurance costs:
- Choose Third Party Insurance for Older CarsCar insurance can either be comprehensive or third party cover. While third party insurance covers only third party liabilities of the car owner, the comprehensive insurance also covers the cost of repairing the damages sustained by the car in addition to third party liabilities. Given the wider coverage that comprehensive insurance offers, it comes for a higher car insurance price than third party insurance. Therefore, you can reduce your overall car insurance premium by opting for third party insurance.But the question is when to skip comprehensive insurance for your car. In case your car is extremely old, you must not buy comprehensive cover for them. This is because there isn’t much difference between the IDV (or the insurance coverage amount) and the insurance premium. Thus, it makes no sense to buy comprehensive cover for your car.
- Install Anti-Theft Devices in Your CarThe cost of a car insurance policy is determined on the basis of the liability that a car poses at the motor insurance company. The greater is the liability, the higher will be the car insurance premium. However, you can lower your car insurance premium by installing anti-theft devices in your car. Devices, such as gear lock, anti-theft alarm and steering lock, etc. reduces the risk of your car getting stolen. In this way, the liability of the car insurer reduces and in turn, they offer a lower car insurance premium to you.
- Avoid Unnecessary Car ModificationsA lot of people modify their cars to enhance their features. With the added features, the value of the car also increases, thereby, increasing the insurance coverage. Wider insurance coverage comes at a higher insurance price. As a result, insurance companies charge a higher premium for even the best car insurance policy. So if you don’t want to spend a lot on your car insurance premium, you must avoid making any unnecessary modifications to your vehicle.
- Compare Car Insurance PremiumsSeveral motor insurance companies in India offer great car insurance plans. With all of them offering impressive coverage at competitive prices, it can be really difficult to choose the best car insurance amongst them all. To find the ideal insurance policy for your four wheeler, you must compare car insurance offered by different motor insurers based on policy coverage, benefits, premium price as well as service offered. The comparison will help you find your ideal car insurance policy without spending a fortune. Therefore, you must compare car insurance to find the perfect policy for your car.
- Raise Your Voluntary DeductiblesAlmost all car insurance plans come with deductibles. It is the share of the claim amount that the car owner agrees to pay in case a claim is raised due to the damages caused to his/ her car. By agreeing to pay a share of the claim amount, you reduce the liability of your motor insurer. As a result, the motor insurer offers car insurance at a lower price. To further reduce your car insurance premium, you can raise your voluntary deductibles. However, make sure to opt for a deductible amount that you can afford to pay at the time of claim settlement.
- Avoid Unnecessary Add-OnsWhen you decide to buy a comprehensive car insurance policy, you get the option of adding add-on covers to your policy. Add-on covers are meant to increase the coverage of your car insurance policy on the payment of a higher premium. For instance, zero depreciation cover, tyre protect cover, engine protect cover, garage cash, etc. Naturally, the more number of add-on covers you add to your car insurance policy, the higher your premiums will get. Therefore, if you want to reduce your car insurance premium, you must do away with add-on covers that you don’t really need. For example, if your car is old, there is no point of buying the tyre protect cover as the tyres may already be worn out. Thus, avoid buying unnecessary add-on covers to reduce your car insurance premium.
- Avoid Minor ClaimsIf you wish to reduce your car insurance premium, you must avoid raising claims for minor damages of your car. Minor car damages are not very expensive to repair. But if you raise a claim for even a small amount, your No Claim Bonus will break and you won’t be able to save on your renewal premiums. Besides, NCB is granted only for claim-free years and can help you earn a discount of up to 50% over a period of five years. Thus, you can keep your car insurance costs low by not raising any minor claims.
- Pay As You Drive Car InsuranceNot all people drive their cars everyday. People who travel through public transport, office cars or travel outstation often do not get the chance to use their cars frequently. With little usage of their cars, paying a hefty car insurance premium can pinch a lot. This is where pay as you drive car insurance comes into the picture. Pay as you drive insurance charges premium based on the total number of kilometres covered by the car. The lesser you drive, the lower will be your car insurance premium. Thus, if you don’t drive your car often, you can reduce your car insurance cost by opting for pay as you drive insurance.
- Avoid Policy LapsesAll car insurance policies have an expiry date. As a car owner, you need to renew your policy every year to ensure insurance coverage for your car. If your car policy is not renewed before expiry, it lapses. A lapsed policy indicates the carelessness and unreliability of the car owner. As a result, motor insurers charge a higher premium on the lapsed policy. So if you don’t want to spend a hefty amount on your premium, compare car insurance plans and renew your policy before the expiry of your previous policy.
In a Nutshell
Car insurance is important for every car owner. If you own a car, maintaining car insurance coverage at all times is inevitable. But if you consider buying the best car insurance an expensive affair, you can reduce your premiums by using the tips and tricks mentioned above. However, don’t forget to compare car insurance plans every time you buy or renew your policy.