5 ways to slash your motor insurance premium at the time of renewal

Updated: June 20, 2017 1:39:02 PM

By choosing wisely, we can lower down motor insurance premium.

Britain, Britain's biggest carmaker, Tata Motors, Jaguar Land Rover, JLR, autonomous, electric technology, Prime Minister Theresa May, BrexitThe best way to save on motor premium is to install safety devices in your vehicle and drive safely.

By Neeraj Gupta

Purchasing a motor insurance policy is basically obeying what law demands, but buying a comprehensive policy at an affordable price is a smart decision. While many people buy third party insurance because it is low priced, a lot of people buy a comprehensive policy which covers both their third party liability and own damage. It is true that motor insurance prices are on a significant rise because of increase in claims and loss ratio of the insurers. By choosing wisely, we can lower down motor insurance premium. Here is the brief low down of certain ways which can help in lowering your motor insurance premium while renewing it for the next policy year.

Drive safe and do not make petty claims

Driving safe can help you earn a discount in the form of ‘No Claim Bonus’ (NCB) because if you always drive safe, the chances of meeting an accident become very low and therefore, you will not be required to make any claim. For every claim-free year, the insurer gives you a discount on your premium at a certain rate which goes up to 50% after 5 claim-free years. But to qualify for NCB, do not claim insurance for minor damages such as scratches and minor dents caused in an accident. By paying such petty expenses from your own pocket, you can enjoy bigger benefits of NCB.

Compare online offers before renewing policy from your car dealer

Most people buy motor insurance from an automobile dealer at the time of purchasing a vehicle. But if your policy is about to expire, you need not get it renewed from the same dealer, instead, compare other insurers’ plans available online and chances are that you will find a similar policy at a lower price. This is possible because your dealer charges a commission which can be anywhere between 10-15% of your policy premium. So if you purchase a policy online you may save a significant amount of money.

Opt for voluntary deductibles

The other discount that you can get, apart from NCB, is in the form of deductibles which you will have to opt for at the time of buying a policy. Deductibles are a predefined share of total claim amount that you agree to pay from your own pocket at the time of claiming insurance. You can get 20% to 35% discount on premium by agreeing to deductibles from the following slabs: Rs 2500, Rs.5000, Rs.7500 and Rs.15000. For example, if you met an accident and your claim amount was Rs 30,000, then you will have to pay the compulsory file charges (kind of processing fee ranging from Rs 1000 to Rs 2000) and the deductible you chose, while the rest of the amount will be borne by your insurer. However, this is only suggested to those who are having a car older than 5 years and do not drive much. Also people living in a less populated place can also opt for deductibles if their car is old enough.

Install safety devices on your vehicle

Motor insurance policies are mainly meant to cover the risks posed to your vehicle, and the insurance premium is determined as per the likely risk involved. If you are an ordinary driver, you will have to pay fewer premiums as compared to a driver who wants to take part in a rally or any other motorsport. Moreover, if you have installed safety devices on your vehicle like airbags, gear or handle lock, GPS tracking device, etc., the risk of the vehicle getting stolen becomes much less. Accordingly, the vehicle’s insurance premium will also be lowered. Such discount is generally 2.5% or Rs 500 on Own Damage (OD) component, whichever is lower. Furthermore, to avail this discount the devices installed on your vehicle must be approved by ARAI (Automotive Research Association of India).

Take membership of certified automobile associations

Almost all insurers provide a discount to vehicle owners who are members of an accredited automobile association such as AAIE (Automobile Association of Upper India), and AASI (Automobile Association of Southern India). This discount is 5% of OD premium, but not more than Rs 200.

In the end, the best way to save on motor premium is to install safety devices in your vehicle and drive safely!

(The author is Head of Motor Insurance, Policybazaar.com)

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