With numerous factors affecting the premium of the policy, policyholders end up paying a higher premium while renewal.
Insurance regulator IRDAI (Insurance Regulatory and Development Authority) has been making quite some changes in the motor insurance space and has brought new rules and regulations portraying the need for buying a motor insurance policy. With these new rules, it has now become imperative to have a motor insurance policy with every vehicle. The premium, however, might vary. For instance, you might have to pay a different premium the following year after buying the policy than the premium paid while buying the insurance policy.
With numerous factors affecting the premium of the policy, policyholders end up paying a higher premium while renewal. Even though insurance companies follow a different process for calculating policyholders’ car insurance premium, there are a few standard things you can stay clear of to avoid an increase in premium.
Here are some of the things that you should keep away from to get a lower premium:
Buy online – You can opt to buy a policy online, given you know the product well. Experts suggest policyholders should know the product well that they are buying. Hence, if you are comfortable in understanding the product, you can also buy the policy online from the insurer’s website, as many companies offer competitive prices on their own website.
No-claim Bonus (NCB) – If you do not make small claims for minor accidents in a year under a policy, companies give NCB. Though no-claim bonus varies from company to company, for straight 5 claim-free years, it can go as high as 50 per cent. However, if you make a claim in the middle, the no-claim bonus is reset to zero which leads to paying a higher insurance premium again. Hence, to avoid paying the higher insurance premium drive safely and don’t make minor claims.
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Lapse of policy – Try to avoid lapsing your policy. Insurance companies generally inspect the vehicle, if you miss the deadline for your policy renewal. Be aware! Through this inspection, most times insurance companies end up charging a higher premium. Hence, you should avoid lapsing your policy. It has also happened that policyholders have also lost their NCB completely because their policy has lapsed for more than 90 days.
Insured Declared Value (IDV) – At the time of renewal, depending on the age of the vehicle the insured declared value (IDV) along with the premium of the policy is determined.
Hence, it is better to put the correct ‘vehicle value’ on which the policy is bought. The IDV is calculated based on how many years the car has been used, and the depreciation of the vehicle which is applied to the ex-showroom price, for vehicles up to five years old. Their market value is taken as the IDV, for vehicles older than five years.
Add-ons – Add-ons with a normal cover can go to a large extent to help you in case of a crisis. For instance, popular add-ons like zero depreciation, and engine protect, help the policyholder avoid paying a higher premium in the long run. Note that, though getting an add-on cover can help in the long run, however, getting a rider with the insurance policy also increases the premium. Hence, evaluate and take a call basis your needs while opting for these add-ons.