How to keep car premiums low and enjoy the ride

This financial year, you will have to pay up to 30% more for third-party cover for your car insurance. Worse, general insurance companies are also mulling an up to 30% hike in other damage-related covers. This means, premium on your comprehensive cover will shoot up by 10-25%. Is there a way out for the hapless consumer? Yes. There are seven ways out indeed. They should help you to keep your car insurance premium low.

No-claim bonus: If you are a careful driver and have a clean (meaning no-accident) history, then the insurance companies are likely to award you a lower premium. A no-claim bonus means that you have not made any claims in the past one year. So, next year, when you go to renew your car, you can avail a discount of up to 15% in the first year. If you continue to be a careful driver, the discounts in premium can go up to 50% in the third year. This no-claim bonus is transferable. That is to say, even if you plan to buy a new car in the coming years, the reward points earned on your old car will not be lost.

Voluntary deductibles: Insurance companies offer voluntary deductibles where the customer agrees to pay the deductible amount in case of making a claim. You can choose the deductible option which can go up to a maximum of Rs15,000.  If you choose this option, your premium amount can be lowered by up to 35%. This can also help you to avoid making claims for a smaller amount and thus can help you to earn the no-claim bonus.

Anti-theft device: A secure car guarantees more than a secure mind. It can translate into a saving of anywhere between 3% and 5% on the premium amount.  But remember that these safety gadgets have to be approved by the Automotive Research Association of India for you to avail a discount.

Online incentive: Buying insurance in a few clicks from the comfort of your home is not only convenient but also cheaper. Those who wish to buy online policies can go to the respective websites of insurance companies and get one cover. The policies sold online are cheaper because the companies don’t have to bear marketing and administrative cost and the agent’s commission is also excluded. So, the companies can afford to pass on the benefit to customers, in terms of up to 40% lower premium cost.

Fuel type: If your car runs on diesel, CNG or LPG, then you will have to shell out more towards premium as compared to a petrol car. “This is because insurance companies reason that a car run on diesel and its variants will have higher usage and repair costs, which translate to higher risk,” says R R Belle, MD and CEO of SBI General Insurance.

Lower risk factors: The premium that you cough up will also depend on the risk factors that the company associates with you. Amarnath Ananthanarayanan, MD and CEO of Bharti Axa General Insurance, says, “For instance, companies generally categorise drivers of young and old age in the high-risk segment which means they will have to higher premium. Also, bachelors will have to pay more as compared to married customers, as marriage spells stability and translates into lower risk for insurance companies.” Other factors that companies take into account are the parking area and the distance travelled every day.

Sum assured: When you go to buy motor insurance, the insurance company decides the IDV (or the Insured Declared Value) of the car. This is the value that the insurance company uses to decide the worth of your vehicle. Banwari Lal Sharma, assistant vice-president of Automotive Exchange, advises that at any point “your sum assured should not increase the IDV. This is because at the time of claim, the company won’t pay you more than the IDV. And you will end up paying a higher premium for nothing”.