Various factors affect the premium of the policy, hence, while renewal most end up paying a higher premium. For instance, the premium for which you buy the insurance plan today might not be the in the following year.
Since last year, the Insurance Regulatory and Development Authority (Irdai) has introduced new rules and regulations portraying the need for buying a motor insurance policy. It has now become imperative to have a motor insurance policy with your vehicle. However, the premium might vary. For instance, the premium for which you buy the insurance plan today might not be the same in the following year. Various factors affect the premium of the policy. Hence, while renewal, most end up paying a higher premium.
Though all insurance companies follow a different process for calculating car insurance premium, but, you can stay clear of a few standard things to avoid an increase in premium.
If you are planning to take a vehicle insurance policy, these are the 5 things that will help you with a lower premium:
Avoid lapse of a policy
In case you miss the deadline for your policy renewal, insurance companies generally inspect the vehicle. Most times insurance companies charge a higher premium through this inspection. Hence, avoid lapsing your policy. Policyholders also lose their no-claim bonus completely if the policy lapses for more than 90 days.
Insured Declared Value (IDV)
The insured declared value (IDV) and the premium the policyholder pays is determined at the time of renewal, which depends on the age of the vehicle. Hence, experts suggest one should set the correct ‘vehicle value’ on which the policy is bought. Insured declared value is calculated based on the years of use, and depreciation which is applied to the ex-showroom price for vehicles up to five years old. For vehicles older than 5 years, their market value is taken as the IDV.
No-claim Bonus (NCB)
Policyholders get NCB in case they don’t make small claims for minor accidents under their policy. Though NCB varies from company to company it can go as high as 50 per cent for 5 claim-free years. However, if policyholders make a claim, the no-claim bonus is reset to zero which again leads to paying a higher insurance premium. Hence, experts suggest one should drive safely to avoid paying the higher insurance premium.
Apart from the basic cover, policyholders can opt for relevant add-ons. For instance, add-ons like engine protect zero depreciation that helps the insured avoid paying a higher premium in the long run. However, add-on riders increase the premium too when added to a regular motor cover. Experts suggest policyholders should evaluate and take a call basis their needs while opting for these add-ons.
One can also opt to buy a policy online. If policyholders know the product well that they are buying, or are comfortable in understanding the product, they can also buy the policy online from the insurer’s website, as most companies offer competitive prices on their own website.