Topic 2: Tips to Reduce the Cost of Your Car Insurance

We always keep looking for various ways to reduce the cost of the product we buy, so that the deal becomes cost effective without compromising on its benefits. And if the cost of the product is on a rise, then making the deal economical becomes our prime concern.  The same goes for a car insurance policy. On the basis of cost inflation and claim statistic, the cost of car insurance is revised every year by IRDAI and last year, the premium rate of car insurance policies was increased by 40%. The increasing price of car insurance is causing problems in the financial planning of many people, but there are many ways through which you can reduce the cost of car insurance premium and make it fit into your budget easily. That’s why we have outlined some of the important tips which will help you to reduce the premium of your best car insurance policy and tackle the increasing price of car insurance in the most effective way without compromising on its benefits.

1. Compare prices
Comparing car insurance policies allows you to choose the most cost-effective and best car insurance in India and with the availability of online car insurance policies, comparing car insurance has become very easy.  You might find a great difference in the price of two policies which are offering almost the same benefit and that’s why a comparison is necessary. You can compare car insurance policies through various IRDAI certified web aggregators or through the insurance company’s online web portal.

2. Install anti-theft devices and stay safe
Car insurance companies decide the amount of premium on the basis of risk associated with the car. Higher risk will result in higher premiums. That’s why the installation of anti-theft devices like anti-theft alarm, a lock for the steering wheel, air bags, etc., reduces your car insurance premium by 5%. And if you are linked with the Automobile Association of India (AAI) or the Western India Automobile Association (WIAA), you can get special discounts and benefits. The members of these associations are considered as “safe drivers” because such associations are empowered by the Motor Vehicle Act and Rule.

3. Avoid Small Claims
If you don’t make any claim for a particular period of time under your car insurance policy, then you are rewarded with No Claim Bonus (NCB) which allows you to lower down your premium till a limit. That’s why you should avoid making claims for small expenses which could snatch your NCB and opportunity to reduce your premium.  A small saving in the form of claims for small expenses can keep away from the big benefits which you could receive in the form of a reduced premium.

4. Go for a higher voluntary deductible
A deductible is the amount of money which you pay from your own pocket upon claim while the insurance company covers the rest. At the start of the policy, you can choose your voluntary deductible according to your need and situation. A higher voluntary deductible decreases your premium amount, but you should choose your deductible according to your affordability otherwise instead of lowering down the premium, you will end up paying more on each claim you make.

5. Transfer your NCB
You should always transfer your NCB after buying a new car and selling the old one. By transferring NCB, you will be able to take advantage of your accumulated NCB on your new car also. You should always remember that a car insurance policy is linked with the policyholder, not with the car. In order to transfer your NCB, you need to inform your car insurance company about the transfer and they will give you a form which will help you in the transfer.

6. Declare correct IDV
Insurance Declared Value is the value of your car which is decided by the insurance company and it is calculated by considering the depreciation value over the original market price. It is the maximum value which you will receive upon the claim in case of total loss or damage. You should always declare the correct IDV of the car because it will make you eligible for a reduced premium. So instead of worrying about car insurance premium popping out of your budget, you should use the above-mentioned tips and make the purchase of car insurance, an economical deal. But in the rush of reducing your car insurance premium, you should never compromise with its benefits.

Source:suggestinsurance.com

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