Most car dealers in India seal the deal with prospective buyers with a multitude of discounts and freebies. Noteworthy among all the free services offered by car dealers is free insurance. As insuring a newly purchased car with car insurance is essential, the word “free” is instrumental in drawing more buyers to a particular car deal. A common catch that individuals who fall prey to such offers are that the insurance is provided is typically only for a year. This means, the onus of policy renewal and premium payment shits on you from the second year. In case you do not wish to opt for this “free insurance” deal, you can opt for a higher discount on the car and buy an insurance policy separately. Following are some of the ways of reducing the payable premium amount of your car insurance in India.
The share of monetary loss borne by you is termed a deducible and it mainly has two components- compulsory and voluntary. Compulsory deductible of 500 would mean that you pay 500 of the claim amount, while the insurance company takes care of the rest. Using the voluntary deducible you can reduce the payable premium amount. However, this would mean that will have to support a large portion of the claim amount from your own pocket in case of loss or damage. According to the president of a well known insurance company, “Those who are confident of their driving ability could opt for a voluntary deductible to save on premium.”
Insured declared value
The IDV is the total market value of your car; a higher value would result in a higher premium. An easy way of reducing premium amount of your car insurance by a few hundred rupees is to declare a low car value. However, this is a cause for concern according to the chief marketing officer of a well-known insurance provider, “This is a double-edged sword as the claim amount for accidents will not be affected by declaring a lower IDV. However, if your car is stolen, you will get a lower amount in line with the one declared by you.”
Inclusion of safety in your car can result in 100-200 discount on premium amount. You can enjoy greater discounts of up to 200 if you come under a ‘safe driver’ category. An easy of becoming eligible for this attractive discount is by becoming a member of the Automobile Association of India. “This improves your image and record in the eyes of insurance companies, which helps you get a discount,” says Sanjay Datta, chief—underwriting & claims, ICICI Lombard GIC.
No-claim bonus (NCB)
A policyholder of car insurance in India who has not made any claim throughout the course of a year is rewarded with a NCB. This will help you reduce up to 20-50 % on your premium from the second year onwards.
Premium declines over the years
With each passing year, the premium gradually declines due to reduced IDV and accumulated NCB. The value of your car declines because of depreciation that result in a lower market value which automatically lowers the premium amount.
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