Money-saving tips on car insurance
Think you’re spending too much on an insurance policy you have to mainly collect the no-claim bonus? Here are six easy ways to lower your car insurance premium.
Most of us renew our car insurance policy like we’re locked into it for life. You’re reminded by your agent or get an alert from your insurer and you pay it before the due date. It’s quite possible that you’ve never even thought of making a switch or altering your policy to lower your costs. Well, you should consider doing so because there’s a lot of opportunity to save. Here’s what you can do.
Basic car insurance is very similar across the industry. This is because they are based on the recommendations of the Tariff Advisory Committee. So the crucial aspects are always the same, but more trivial (though money-saving) matters may differ. For example, ICICI Lombard limits the no-claim bonus after seven claim-free years to 50% while Reliance General will bump it up as high as 65% in the eighth year. Despite the similarity, though, prices are very different across insurers. This difference could be as much as 50%.
For example, when we looked at the premium for a year-old Maruti Swift LXI, we received very different quotes from different insurers on Policy Bazaar. National Insurance, for example, quoted a rate of Rs12,839, nearly twice as much as the cheapest policy on offer, from Bharti AXA, at Rs6,314. You could that argue that the difference is mainly because National Insurance doesn’t have an online policy, but even online policies can differ in price. Bajaj Allianz’s quote, for example, was Rs11,436. With such a big difference in price, half your work is done by simply comparing prices on online aggregators, such as Policy Bazaar or My Insurance Club.
Have you decided against making a claim after minor damage to your car? Well, the no-claim bonus is usually worth protecting. If you believe you’re not going to make a claim unless something severe happens, consider increasing your voluntary deductible. Generally, if you’re making a claim, you need to pay the first Rs1,000 (cars below 1500cc). This is standard. If you elect to raise the deductible, however, you’ll also receive a discount on the premium. With Bajaj Allianz, for example, the deductibles range from Rs2,500 to Rs15,000. If you opt for a deductible of Rs2,500, on any claim, you’ll be paying the first Rs2,500 of the bill. In exchange for this, the company will give you a 20% discount on the premium, but subject to a maximum of Rs750. Opt for a Rs15,000 deductible and you get a 35% discount on the premium, subject to a maximum of Rs2,500.
All insurers sell you a policy based on the age of your car, but some also take into account your personality. At these companies, age, profession, marital status and experience behind the wheel is also taken into account. Royal Sundaram takes all this into consideration, while HDFC Ergo will drop the premium by 5% if you’re a chartered accountant or serve certain sectors of government. If you’re more likely to benefit from this, it might be worthwhile considering buying insurance here.
Lower your IDV
Vehicles have an insured declared value (IDV), which is the amount for which your car is insured. If your car is stolen or totaled, this is the amount you receive. Every year, your IDV will decrease. After a year, for example, the IDV of your car will be 20% less than what you paid for it. However, you can raise or lower your IDV based on what you wish to pay as premium. If you lower it, you’ll get a discount. With Reliance General, for example, a new Maruti Alto could be insured for Rs7,800. If you drop the IDV by Rs30,000, however, the insurance would also drop by Rs1,000. Remember, however, the you’ll lose that Rs30,000 in case your car is stolen or wrecked.
If you have an anti-theft device installed in your car, inform your insurer by all means. If it’s been approved by Automotive Research Association of India, insurers will knock off 2.5% off your annual premium. This is, however, subject to a maximum of Rs200. Anti-theft devices are in the range of Rs5,000 to Rs10,000.
Become a member of an auto association
If you are a member of a driving association, such as Automobile Association of Southern India or Western India Automobile Association, you can get a discount of 5% on the premium, as these associations organise courses on road safety and advanced driving.