Car insurance is a policy which protects you and your car from any damages or risks which lead to any financial losses. This policy is essentially a contract between an insurance company and you. For the financial coverage you get from the policy, you will have to pay a premium amount to the insurance company for the policy’s tenure. The premium calculation will differ for different insurance companies.
If you are looking for 5 easy tricks you can use to decrease the amount you pay on your car insurance premium, read on.
What factors affect your car insurance premium?
Before we look at how you can reduce your car insurance premium, let us understand the factors that affect your premium:
- Insured Declared Value (IDV): IDV is determined by the existing market value of your car. It is the total sum assured you will receive if your car gets stolen or damaged beyond repair. Ensure that you select the correct IDV for your car to ensure you receive an optimum sum assured at the time of claim settlement. Higher the IDV, higher will be the premium.
- Make and model of the car: Luxury or sports car will demand a higher premium than regular cars.
- Age of the car: Newer cars will have costlier premiums than older cars.
- Type of policy: Third-party insurance policy or a standalone own-damage cover is costlier than a comprehensive insurance policy.
- Add-ons selected: The higher the number of add-ons, the higher will be the car insurance premium.
- No Claim Bonus (NCB): NCB is the reward you receive from the car insurance company for not filing a claim. The reward is in the form of a progressive discount in the insurance renewal premium. So, the longer you have gone without filing a claim, the higher will be the NCB discount.
- Mode of insurance purchase: Online car insurance policies are cheaper than offline policies.
- Personal details of the policyholder/owner-driver: Age, marital status, driving history and claim history of the applicant affects the car insurance premium directly.
How to reduce your car insurance premium?
- Deductible amount:
A deductible amount is a sum that you will have to pay from your own pocket when filing a claim. For example, if you file a claim for ₹10,000 and your deductible is ₹2,000, then the company will pay only ₹8000. If you increase the deductible amount in your policy, the premium amount you will need to pay will reduce. But you must select an amount that best suits your financial condition. One method you can follow is by opting for a low deductible amount and increasing it later. It is advised that the deductible amount should be less than the NCB (No Claim Bonus) you are entitled to in the coming year.
- Steer away from small claim expenses:
When you have opted for an insurance policy, you are entitled to a certain amount of NCB (No Claim Bonus) discount for every year in the tenure you don’t file a claim. While an insurance policy is meant to cover any damages and repair costs for your car, it can bode well for you if you don’t file a claim for minor issues like a broken taillight or headlamp. Since the repair costs for these will be considerably low compared to the amount you can get through NCB. When you renew your policy, the NCB discount will be applied to the premium amount you had to pay.
- Purchase insurance online:
With almost every service available online, you can also purchase your car insurance online. All you will have to do is visit the insurance company’s website and select the policy that suits your requirements. When you purchase it online, you can look at the different options available and select the car insurance price that fits your budget. Buying insurance online can also help you compare car insurance policies and select the one perfect for you. It can also provide you with great deals on the policy.
- Anti-theft devices installation:
Because of the increase in automobile thefts in the country, it is important to install different anti-theft devices in the car. Different devices like a gear lock, anti-theft alarm or steering lock can safeguard your car from getting stolen. Apart from this, installing such devices can reduce your annual premium amount by approximately 5 per cent.
- Correct IDV:
Insured Declared Value is the declared value of your car, which is set by an insurance company. The IDV is the highest amount an insurance company will pay in the event of theft or total damage to the car. If you value the IDV precisely, you may get a low premium. But, if you register for a low IDV, it may result in you getting only that much at the time of a claim against your own declared value.
To calculate car insurance premiums easily, you can use a car premium calculator. Using the premium calculator is simple and will provide you with the quotes you are eligible to get. You can use the calculator to customize the components of your policy. This will help you select a plan that will be most suitable for you. The calculator will also come handy at the time of calculating the car insurance renewal premium.
Hence, a car insurance policy is an efficient way of protecting yourself from any damage costs. It will protect you and your car from incurring heavy financial losses. To keep the policy intact, you will have to pay premiums for the tenure of the policy. So ensure that you use a car insurance premium calculator to calculate the correct premium and apply the above-mentioned tips to lower your premium outflow.