Ways To Save Money On Car Insurance India
In India, having at least third-party car insurance is mandatory under the Motor Vehicle Act, 1988. Car insurance is not just a legal obligation but an essential safety net for you and your four-wheeler.
A car insurance policy is the financial protection that safeguards you from the burden of bearing unexpected expenses that may arise due to thefts, accidents, natural disasters, and third-party liabilities. A comprehensive car insurance plan covers unpredicted dangers, giving you peace of mind.
However, car insurance premiums can add up. But worry not! Here are 7 smart ways to save money on car insurance in India:
Compare car insurance quotes: You can easily compare car insurance quotes using car insurance premium calculator and compare the prices offered by different insurance companies.
The parameters used in the car insurance premium calculator are-
Car details- Make and model, manufacturing year, fuel type, variant.
Claim history- Any claims made in the past
Preferred coverage- Type of car insurance policy you need – Third-party or comprehensive along with choice of add-ons
This way, you can evaluate different insurers and get the best coverage at a reasonable price.
Evaluate No-Claim Bonus (NCB): A no-claim bonus is a kind of reward that you get for every claim-free year on your car insurance. This is the discount that your insurer gives you for not raising claims, and you can save significantly on the premium of your car insurance policy.
Number no-claim years
No-claim Bonus%
First year
20%
Second year
25%
Third year
35%
Fourth year
45%
Fifth year
50%
The greater the number of claim-free years, the higher will be your discount on the premium (maximum 50%).
Increase Your Voluntary Deductible: The deductible is the amount that you choose voluntarily to pay out of pocket in case of a claim. Make sure to wisely decide upon this amount so that it does not impact your budget at the time of claim.
Let us understand this with the help of an example: You have a car insurance policy in which you choose to bear up to ₹2000 upfront from your pocket. In the case of a claim of ₹6000, you need to bear ₹2000 from your own pocket as this is your voluntary deductible, and the rest ₹4000 will be paid by your insurance company.
The higher the deductible you choose to pay upfront, the lower will be your car insurance premium.
Choose add-ons wisely: Your standard car insurance policy may not have any additional features that you are looking for. To enhance the overall safety of your four-wheeler, you can opt for add-ons with your basic car insurance policy by paying a certain amount on your premium. This added financial protection ensures peace of mind.
Roadside assistance
Loss of key cover
Zero Depreciation Cover
Electronic and non-electric cover
Towing charges cover
The common add-ons available with a car insurance policy are as follows:
Choose the Right IDV (Insured Declared Value): IDV is the current market value of your car, which is the maximum sum insured that your insurer will pay you in case of theft or total loss of car.
IDV can be calculated as follows:
IDV = (Ex. Showroom price-Depreciation value of car) + (Cost of car accessories-Depreciation of car accessories).
The depreciation rates are determined in the following manner-
Car’s Age
Depreciation % for IDV
> 6 months
5%
6months – 1year
15%
1year – 2year
20%
2year – 3year
30%
3year – 4year
40%
4year – 5year
50%
If you choose a lower IDV for your car, the premium will be lower, but make sure you get enough coverage for your four-wheeler.
Review your policy Regularly: Over time, your driving habits and needs might change. So, it is advisable to review the policy to ensure that you are paying for the right coverage. Check for the add-ons and opt out of any additional features from your car insurance policy that you no longer require. This would help you save money on premium costs.
Install anti-theft devices– When your car is equipped with safety equipment like anti-theft devices, the safety of your car increases. You can easily minimize the risk of theft, which may make you eligible for a certain discount on your car insurance premium.
Conclusion
A car insurance policy is a safety net for your car that helps you cover your four-wheeler against financial burdens that may arise due to theft, fire, or natural or man-made calamities. The price of a car insurance plan can vary depending on the car make and model, coverage type, add-ons, etc. However, by wisely evaluating your car insurance requirements, you can save on the car insurance premium and secure your car within your budget.
Disclaimer: The content on this blog is for informational purposes only and should not be considered as professional advice or any form of opinion. Please go through policy related documents carefully or consult with a qualified professional bef ore making any decisions regarding insurance or financial matters.
