How to reduce auto insurance premiums? Your driving habits, the use of the vehicle may be important
Vehicle owners should also consider the rising cost of insurance, in addition to the price of fuel. With an increasing number of road accidents and thefts of vehicles and their parts, purchasing an insurance policy is a prerequisite. But how to reduce the car insurance premium offered by public and private companies.
Usage based insurance plan
Traditionally, vehicle insurance is decided based on the make and model of the vehicle and not on the driving style of the consumer. But you can pay the premium according to your driving habits and the use of the vehicle, that is to say the distance traveled. In such a case, the premium is calculated based on the distance traveled by the vehicle and the owner can deposit money depending on the use. In this way, the amount of the premium can be reduced considerably. This modern concept of usage-based insurance is called telematics.
Bonus without claim
Tthe insured has everything to gain with the no-claim bonus or the NCB. The insurer will pay a non-loss premium for each loss-free year. The NCB starts at 20 percent and can increase up to 50 percent if no claims are made for five consecutive years. The NCB discount considerably reduces the premium. Thus, vehicle owners can save a certain amount when the claims are assessed on the basis of the no-claims bonus ratio.
Avoid making claims for small damages
If one makes a claim for minor issues, it can lead to a situation where one could even lose the NCB. In addition, this will also result in ineligibility for the NCB next year. How it works? Suppose you are entitled to a reduction of Rs 5,000 as an NCB reduction next year. But your vehicle is partially damaged, requiring repairs worth Rs 2,000. If you request a claim to repair minor damage, you risk losing your eligibility for the Rs 5,000 NCP!
Suo moto franchises
Almost all insurance plans have mandatory deductibles. Deductibles are the amount that an insured person must bear as part of the claim amount. After determining Rs 1,000 in your policy as deductibles and the claim amount to be paid is Rs 10,000, the insurer will pay you Rs 9,000 less the Rs 1,000 that you have to bear on your own. The insurer decides on the compulsory deductibles. But if you choose a higher amount as the deductible and agree to bear a higher amount in the event of a loss, it will help you lower the premium.
Only buy third-party coverage for older vehicles
Auto insurance has two components: third party coverage and damages coverage. These two are part of the full coverage. Third party coverage is compulsory. This will insure the vehicle owner from liability for compensation to the third party whose vehicle is damaged by you. But since the third party warranty does not protect your vehicle, it is advisable to take out comprehensive coverage. However, the value of the vehicle decreases from year to year. If your car is over 10 years old, it would be best to take out liability insurance only.
Install anti-theft equipment
There are two major advantages to installing anti-theft equipment on your vehicle. The equipment improves the safety and security of your vehicle. If you have installed an anti-theft device in your vehicle then the insurer promises you a premium discount. But one would only be eligible for the discount if an anti-theft device approved by the Automobile Research Association is installed in the car.
(The above information is provided by Gurdeep Singh Batra, Head of Retail Insurance Underwriting Department, Bajaj Alliance General Insurance.)