Among all kinds of insurance Auto insurance is a compulsory legal requirement and an expensive one too. So each vehicle owner can try and be very careful and reduce his/her premiums. The criteria for premium rating have changed beyond the four parameters prevalent earlier, like geographical zone, engine capacity, price, and age of the vehicle. Now its possible to save (10% – 30%) on premium just by giving correct and detailed information to the insurer. Always fill the proposal form clearly and provide as much as information as possible. Since the parameters are always being fine-tuned and new ones added, it is better to provide all the information possible and you may never know which parameter can help in lowering the premium.
Following are few tips on saving on your Motor Insurance premium:
- The CAR – its make and model - Each car because of its make and model has its own claim record and the insurer prices the vehicle based on its claim experience. Few models are more claim-prone because of their structure or usage. For a make/model with favorable loss ratio, the discounts offered would be higher than that of makes/models that frequently meet with accidents. The incidence of accidents depends on the location and attributes of the driver. Some make/models have high-priced repair costs. Discounts depend on past performance and repair cost of the make/model of the car.
- Driver’s gender – The discount depends on the policy of the insurers, however gender of the driver helps to lower the motor insurance premium. As some insurers consider male drivers better than female drivers, and therefore give them some discounts while others believe the opposite (mainly in the west).
- City – where the vehicle will be driven – Now cities and towns where the vehicle is used or registered are also taken into consideration, other than the two zones. Premiums are calculated based on the location and keeping the various factors like,
congestion or high density of vehicles, high incidents of theft, rough terrain etc. The location is important for deciding on the discount to be offered. In congested cities with bumper-to-bumper traffic, the chances of smaller claims for scratches and dents are more whereas for a highway-driven vehicle, the chance of the vehicle meeting with a major accident is comparatively higher. - Driver’s Profession – The occupation of the person driving/using the car is vital for premium calculation. For example, an office goer will use the vehicle to commute between office and home whereas; a retailer will be using it extensively.
- No Claim Bonus (NCB) – Premium due for renewal is discounted if there is no claim preferred during the currency of the expiring policy. This discount is allowed as a percentage on the ‘own damage premium’ and the same is increased every year to the next slab if a claim for damage to the vehicle is not preferred. This discount is known as ‘no claim bonus (discount)’.
This discount goes up to 50% and the discount earned stays with the policy holder even if the vehicle is sold or if the customer wants to get the same transferred to a similar vehicle owned by him/her. An NCB earned can also be kept in abeyance and utilized on a car bought at a later date. It is, however, important that the customer renews a policy in time as the NCB lapses in case of delayed renewal (break in insurance beyond a stipulated time period). - Voluntary Deductibles - If the customer desires, he/she can opt out of small claims for minor damages. A voluntary deductible discount is offered and the discounts can go up to 35% of the premium for vehicle damage. Availing this cover, insured voluntarily agrees to bear the stipulated amount of claim and the insurance company will pay a claim only for the damages in excess of this limit of voluntary deductible.
- Safety features - Installing an anti-theft device or other safety features (like anti-theft device, air bag, etc) reduces the risk perception of the vehicle in the eyes of the insurer which in turn increases the discount (2-5%) but it is important to fit an approved make to claim the discount.
- Member of Automobile Association – If the customer is member of any designated automobile association, he/she can avail a discount on his/her ‘Own Damage’ premium (applicable for private car and motorized two wheeler policies). A discount of 5% is given on the own damage premium, subject to a maximum of Rs 200/- for a private car and Rs 50/- for a two-wheeler.
- Concession for laid-up vehicles - If the vehicle is garaged or is out of use for some period (minimum of two months), the existing policy scope can be restricted for parking risks and the customer can avail a concession during renewal of the policy either by way of extending the period after expiry or a credit to the renewal premium.
- Buy/renew car online – Some insurers, including Royal Sundaram and Bajaj Allianz, offer a higher discount when you buy or renew a private car online. The insurance company has a considerable saving on processing and distribution costs which are passed on the customers.
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