Owning and maintaining a car in India can be a costly affair for many. Whether you’ve taken a car for an everyday commute or you wish to take it out on special occasions, there are certain costs that you will have to incur on your vehicle to keep it secure and going. One of the many recurring costs that car owners cannot ignore is the timely payment of car insurance for their vehicles.
If you have already purchased car insurance from a reliable insurance company a year ago, you will have to keep renewing the policy on every scheduled renewal date to be able to enjoy the coverage benefits. But the best part of policy renewal is when you get the chance to upgrade it according to your needs.
Various ways can be employed to save money on your car insurance renewal online, and we’ve listed down all the possible money-saving options below for your convenience.
1. Set the Right IDV Amount
The Insured Declared Value (IDV) plays a significant role in deciding the car premium you’ll be paying, as the sum insured of the policy is also decided based on the IDV. For the uninitiated, IDV refers to the maximum amount the insurer is liable to pay if your car gets stolen or damaged beyond repair in a road mishap.
You can calculate the IDV of your car by deducting the depreciation amount from the ex-showroom price. The resultant figure will be the current market value of your car, which you can use as a base to negotiate the premium with your insurer. For example, when you took insurance for a newly purchased car, you would have got a good sum insured because the IDV was ex-showroom price minus the depreciation rate of 5%. Higher IDV and sum insured translates to higher premiums.
But if your vehicle is more than a year old, it will depreciate at a faster pace, i.e., 20%. So if you’re renewing your car insurance after a year, you should calculate your current market value by deducting the depreciation amount from the ex-showroom price to get the current IDV. It will be lower than last year. And as IDV and sum insured decreases, so will the premium.
2. Compare Car Insurance Plans from Other Insurers
It may seem like a daunting task, but you should do it anyway to get a better policy. When you compare car insurance with other insurers, it makes it easier for an informed switch. You can start by using insurance comparison websites to get a list of the possible plans from different insurance companies to consider and review.
Once you have shortlisted a few policies, start by thoroughly checking their inclusions, exclusions, terms & conditions, and other relevant aspects. Note down their premium (approximate amount), offerings, and exclusions in a simple format, and then compare it with your current policy. You can use any car insurance premium calculator available online to get an idea of the premium you’ll have to pay for the shortlisted insurance plans.
Always compare policies on equal grounds, assess the options you deem fit, and go ahead with the one that looks like the best available alternative to your current car insurance policy. A car insurance policy that offers the same benefits as your existing insurer does but at a lower premium will be the best option to go ahead with.
Also Read: Types of life insurance policies in India.
3. Look for No Claim Bonus
No Claim Bonus (NCB) is like a reward in the form of a discount in premium, offered to those who don’t make any claim during a policy year. If you don’t file a claim for a few consecutive years, you will be eligible for an NCB.
A percentage or limit is set for each claim-free policy year that the insured will be entitled to, and the maximum limit is 50%. So if you don’t file a claim for five consecutive policy years or more, you may be entitled to receive a maximum 50% discount on your premium during policy renewal. But always remember, “consecutive claim-free policy years” is the phrase.
4. Buy Insurance Online
Renewing car insurance online is not only convenient but also economical when compared to other offline methods. It saves you from long queues, offering discounted premiums, with offers explained in detail, also you can save money from paying commissions to the agent. There is a tendency that renewing insurance can slip out of our minds due to busy schedules, hence car insurance online comes to your rescue. With a swipe wherever you are, renew your car insurance now.
5. Reassess Your Existing Add-on Covers
As a car insurance holder, you must be aware that the premium goes up proportionately with every add-on you include in your policy. On the purchase of a new car, naturally, you might require many add-ons for security purposes, but after a few years, realize that not all add-ons are not applicable.
In such cases, while renewing your car insurance plan, you can evaluate your present needs and see if all the add-ons added to your policy are still relevant or not. Prioritize your needs into these two categories. i.e., a must-have and extra layer of security.
It’s the best choice to have add-ons, but choosing wisely will help you save money on your renewal. The more add-ons you remove while renewing, the lower the premium will be.
6. Choose the Best Type of Insurance Plan
When it comes to car insurance, there are two most popular and commonly availed options, i.e., third-party insurance & comprehensive car insurance. They differ a lot in coverage terms and premium, so you should go ahead with the insurance plan that covers your basic requirements to save money.
- Third-party insurance: A third-party car insurance plan will only secure you against financial strain arising from losses/damages caused to a third party individual. This is a very basic insurance plan mandated by law. This insurance plan doesn’t cover the losses/damages caused to the owner’s vehicle. You should choose this insurance type only when you cannot afford to pay high premiums and are satisfied with the limited coverage.
- Comprehensive insurance: On the other hand, comprehensive vehicle insurance is an all-inclusive policy with a wide range of benefits and add-ons. It secures the owner’s vehicle against its own damages and third-party liabilities. When you purchase comprehensive car insurance, you also get the option to upgrade the coverage by purchasing some relevant add-ons. The premium payment will comparatively be higher than third-party insurance, but not with exorbitant prices.
Moreover, the priority of the coverage should be a standpoint rather than the premium amount. This will offer safety for yourself and the car in the long run. It’s best to be prepared with such premiums if odds come your way.
7. Opt for Voluntary Deductibles
When the article itself is titled as “tips to save money” we get real at it! Saving money during renewal is the best thing you could do for yourself. That’s why opting for a higher voluntary deductible is the best alternative. Voluntary deductibles give you freedom and choice to save, and to choose an amount of your choice, unlike the compulsory deductibles.
All insurance policies have a voluntary deductible clause in their plans. When you opt for a voluntary deductible, you save yourself a significant part, thereby getting to buy the policy at a lower premium amount.
For eg: your bike repair costs Rs. 4000, and you had opted for a voluntary deductible worth Rs. 800, then the insurer will pay for the remaining claim amount, up to the limits mentioned in the insurance policy. In consideration to this calculation your premium will be calculated based on the deductible you choose. Higher valued deductibles will reward you with lower premiums, and here’s why opting for higher voluntary based deductibles is important to enjoy affordable premiums.
Voluntary deductible is an investment you make towards the repairs of your two-wheeler in advance. You can enjoy the discounts on your two wheeler insurance premium if you have opted for a voluntary deductible while buying the insurance policy.