Worried about your new car insurance premium? Here's the hack to reduce your insurance cost

A lot of motor insurance policies encourage good driving habits by decreasing the cost of vehicles that are not driven often enough. The sale of cars in India finally saw a boost during the festival season following the slow period of the pandemic as well as its subsequent supply chain problems.

The buyers are reaping the benefits of the post-pandemic recovery that is reflected in cars for sale across the country. Nearly 2.1 million units (20,94,378 units) for five vehicle segments – two and three-wheelers, passenger vehicles, passenger vehicles, tractors and commercial were sold this October, as per FADA research.

In addition to discounts and special deals, there's a third area that can increase your savings: your motor insurance cost. In India, motor insurance is required by law and is essential to ensure one's safety while driving. As people search for ways to cut costs on the cost of fuel as well as a car's showroom cost, they frequently do not consider the premium price.

Do you drive less? Opt to pay as you drive insurance

The technology-enabled 'Pay as You Drive' (PAYD) is an innovative concept introduced as a policy of regulatory sandbox through the Insurance Regulatory and Development Authority of India (IRDAI) months ago. This PAYD car insurance policy is a usage-based model. The person who buys it is issued a binding third-party liability insurance policy, but the personal damage component is contingent on the type of use for the vehicle. In recent times, the model was released by the regulator as an additional option to help customers save money on premiums. Utilizing a tracking device or mobile app it is possible to measure the distance travelled in kilometres and calculate the price on this. In addition, insurance companies can offer policies that allow you to turn off your insurance days when you do not plan to drive your car. This is ideal for those who work in an automated setup or hybrid vehicle, or for anyone who does not drive frequently and chooses to use public transportation or taxis.

Are you driving safely? Select the 'Pay for your driving add-on

Till now, there was no system to reward the best driving performance, besides the no-claim bonus, or NCB. IRDAI has recently introduced the "pay-as-you-drive" model, which tracks driving patterns and profiles of drivers as well as rewards drivers with discounts on premiums for safe driving. Thus, anyone who follows the guidelines and is careful when driving could pay less than one who breaks the rules or exceeds the limit of speed. This is an excellent benefit not only to get a discount but also to maintain road safety.

Do you have multiple vehicles? Consider a family-floater insurance policy

There's no shortage of households in India with members who have their automobiles. But that does not mean that they are all in use in the same way. Most people will opt for a larger vehicle to travel long distances, and prefer smaller vehicles for everyday requirements. In this scenario, there is no need to pay the cost throughout the year for every car. You can choose a family floater plan in which all of your vehicles are covered under one umbrella plan, and the cost will decrease by itself.

Take into consideration the deductibility

In the case of auto insurance, the deductibles often referred to as voluntary deductions the costs out of pocket that the insured has agreed to cover at the time of claiming. The deductible should be carefully selected and under your risk-taking profile.
In the case of a claim, if you leave the deductible at zero, you will be able to get the total amount without paying any out-of-pocket but you will be required to pay a greater premium. However, in case you are an experienced driver who is less likely to submit an insurance claim, you could opt for a higher deductible to subsequently reduce the cost. But it is important to be aware of the minimum deductible of Rs 100 that must be met even if you opt for the voluntary deductible at zero.

No Claim Bonus

As previously mentioned, the no-claim bonus is the most sought-after method to reduce the cost of premiums. This is a benefit that an insurance company offers the policyholder in exchange for taking care of the vehicle and not making an annual claim.

In other words, for every year without a claim, the insured will save money by receiving attractive discounts or lower premiums when purchasing and renewals of insurance. In the case of insurance, for instance, according to the rules, you are eligible for a maximum of 20 per cent reduction in the initial year as well as a discount of 25 per cent after two years and a discount of 35 per cent following three years and finally a discounted rate of 45 per cent after 4 years if no claims are filed. This benefit is, however, unenforceable when you file one minor claim or fail to keep your policy in force for three months from your policy expire date. Therefore, it is advised to avoid filing claims for minor damages instead of paying for the damages yourself. Also, if you decide to purchase an automobile that you trade in an older one make sure you move your bonus to no claim. You may also choose to purchase no-claim bonus protection to ensure it remains intact even if you do attempt to claim.

In addition to the tips above to get a bit more savings, it's a good idea to look at the different policies and features before making a purchase. Make sure you read the fine print and understand any hidden charges before deciding on the best policy.

(DISCLAIMER: Any views expressed are the author’s own and have nothing to do with OTV’s charter or views. OTV does not assume any responsibility or liability for the same.)