There is an old saying – “Loyalty has its own rewards.” However, sometimes trying something NEW can be more beneficial than staying ‘loyal’ to the old thing or the same service provider. An auto insurance plan can aptly prove this point. We have always heard how a long-term auto insurance plan is more beneficial to the customer. And how companies reward their customers for being with them for a longer duration, and so on. However, there are also some disadvantages of continuing with the same auto insurance plan over the years. Let’s have a look at them:
1. Same Premium over the years: Customers continue with the same auto insurance plan year on year mainly because they think their premium will stay constant or increase marginally. Also, they do not want to go through the entire process of buying a new auto insurance plan and the hassle of paperwork that comes along with it. “However, there are higher chances that over a period of time other insurers may come up with better plans which have lower premiums than what you are paying currently. It is always advisable, therefore, to check for new plans before your policy is due for renewal and get the best possible premium and features,” says Devendra Rane, Founder & CTO, Coverfox.com.
2. Lower IDV on Renewals: Are you aware that your claim amount is based on the Insured Declared Value (IDV) of your vehicle? Your existing insurer may be providing a lesser IDV to you on renewing your existing auto insurance plan in order to keep your premiums the same for the next year also. However, in case of an accident you will be eligible for a lower claim amount as the insurer has reduced your IDV. Check with other insurers to get the correct IDV of your vehicle before renewal. This will help you to know whether you are getting a better deal from other insurers or is it worthwhile continuing the same auto insurance plan.
3. Losing out on No Claim Bonus is a myth: There is also an inert fear among the policyholders that if they try to move to a new insurer they would lose all their accumulated No Claim Bonus. However, “that is not the case. You simply need to declare your previous policy number, insurer and NCB to the new insurer. The new insurer will then get the declared NCB verified and will attach your accrued No Claim Bonus to your new policy and may even provide an additional discount on your premiums depending on the No Claim Bonus amount,” informs Rane.
4. Losing out on New and Better Add-Ons: If you continue staying put with the same auto insurance plan, there are also high chances that you may lose out on new and better add-ons on new plans that other insurers might have introduced. Your insurer may also be not willing to extend these new and better add-ons to you. So, it is always beneficial to check what is trending in the market and how it can help you.
All in all, “you must always weigh the advantages and disadvantages of continuing with the same auto insurance plan over the years, and if you are benefiting more from moving on, you must go for it without giving it a second thought,” Rane says.