Want to reduce your car insurance premium? Keep these things in mind

By: |
September 17, 2020 1:47 PM

To avoid paying an increased premium, there are a few standard things you need to keep in mind, even though all insurance companies follow a different process for calculating policyholders' motor insurance premiums.

insurance, motor insurance, renewal of motor insurance policy, motor insurance claims, pollution under control certificate, PUC certificate, IRDAIThere are various factors that affect the premium of a policy, such as the Insured Declared Value (IDV) of the vehicle, No-Claim Bonus (NCB), add-ons, etc. because of which most end up paying a higher premium while renewing their policies.

 

As per the Motor Vehicles Act, buying a motor insurance policy is mandatory for every vehicle owner in India. Even though a motor insurance policy is imperative, the premium, however, may vary from time to time. For instance, if you buy a policy today for a certain premium, that may not be the same next year. There are various factors that affect the premium of a policy, such as the Insured Declared Value (IDV) of the vehicle, No-Claim Bonus (NCB), add-ons, etc. because of which most end up paying a higher premium while renewing their policies.

To avoid paying an increased premium, there are a few standard things you need to keep in mind, even though all insurance companies follow a different process for calculating policyholders’ motor insurance premiums.

If you are going to renew your motor insurance policy, here is how you can lower your premium:

  • No-claim Bonus (NCB): No-claim bonus is offered to policyholders by the insurers when they don’t make any claim under the policy. The NCB usually goes as high as 50 per cent for 5 claim-free years, even though it varies from company to company. In case the policyholder makes a claim, the no-claim bonus is reset to zero, leading to a higher insurance premium. Hence, you need to drive carefully to avoid making any claim.
  • Lapse of policy: You can avoid lapse of an insurance policy, by paying the dues on time. In case a policyholder misses the deadline for their policy renewal, insurance companies generally inspect the vehicle, after which usually insurance companies charge a higher premium through this inspection. Hence, experts say it is better to avoid lapsing a motor insurance policy. Additionally, policyholders also lose their NCB completely, if the policy lapses for more than 90 days.
  • Insured Declared Value (IDV): Depending on the age of the vehicle, the insured declared value is determined by the insurer at the time of renewal. The IDV is calculated based on the years of use of the vehicle, along with depreciation which is applied to the ex-showroom price on vehicles up to 5 years old. For older vehicles (more than 5 years) the market value is taken as the IDV of such cars. Hence, try to set the correct ‘vehicle value’ on which the policy is bought.
  • Add-ons: Having relevant add-ons with a base insurance cover will give you an overall cover. For instance, a car insurance add-on like zero depreciation, engine protection will help you avoid paying a higher premium in the long run and also cover you from such damages. Keep in mind that add-ons will immediately increase your premium when added to a regular motor cover. According to experts, evaluate it and make a call based on your needs while opting for such add-on covers.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Income Tax appeals to be finalised in a faceless manner: Know the online process for taxpayers
2New RBI guidelines on loan moratorium: What should borrowers do?
3Faceless appeals for direct tax cases launched