How to reduce premium cost during car insurance renewal?
How to reduce premium cost during car insurance renewal?
Published on February 23, 2022. EST READ TIME: 3 minutes
![Wondering how to reduce premium cost during car insurance renewal? Here’s a guide Wondering how to reduce premium cost during car insurance renewal? Here’s a guide](/images/default-source/car-insurance/shutterstock_682609054.jpg)
Timely car insurance renewal is essential to make sure that you remain financially protected in case of an unexpected event, but this also means having to pay regular premiums. As a smart vehicle owner, you want to get as much discount on insurance premium as you can. So, here are 10 tips for reducing premium costs upon car insurance renewal.
1. Make sure you are getting full NCB:
Your No Claims Bonus is the primary driver of discount on your insurance policy. When you drive your car over the years without making a claim, the insurance company starts providing you with a No Claims Bonus to further promote your commitment to safe driving. This bonus starts from the completion of the first year of no claims where you get a 10% renewal discount. This will grow over the next few years and accumulate to a maximum of 50% discount when a specified period has passed.
2. Choose a higher deductible:
Deductible is the component of your claim amount that you agree to bear out of your pocket. Insurance companies allow you to choose a higher deductible in lieu of a discount on insurance premium. You pay less money upon car insurance renewal, and if you do not make a claim by the end of policy validity, you end up saving the money.
3. Get an ARAI approved anti-theft device fitted in your car:
Car theft is a big problem for people, police and insurance companies in India. In fact, insurance companies process so many claims of car theft every year that they provide a special discount of 5% to people who install ARAI approved anti-theft devices in their cars. These devices are cheap and easily make up for the discount that insurance companies offer in policy renewals and you also get to add another protection system to your car!
4. Become a member of the Automobile Association:
Automobile Associations are present all over India and do a lot of advocacy and support work on behalf of people who own automobiles. Becoming a member of the Automobile Association in your area can bring you another 5% discount on the own damage cover premium at the time of car insurance renewal. Besides this, the membership also provides multiple features like discount on PUC certificate, simulated driving training, and more.
5. Buy a multi-year policy:
There are numerous reasons why people prefer to buy multi-year insurance policies. Apart from the sheer convenience, you also get to benefit a lot in financial terms when you buy a multi-year policy. First, you get No Claims Bonus for all the eligible years upfront. Second, all other applicable bonuses and discounts become applicable upfront as well. Third, you pay taxes and third-party premium prices at today’s rate and protect yourself from future price hikes.
6. Buy car insurance online:
If you have still been using the traditional, agent-based model for car insurance renewal, it is time to make a digital move. Buying car insurance over the internet is way cheaper because there are no agent commissions involved and insurance companies can pass on that benefit to you directly in the form of lower premium prices. Plus, the customisation features provided by insurance companies over the internet, including the option to choose add-ons, makes the whole thing good value for your money.
7. Shop around from different insurance companies:
Comparison shopping is a great way to reduce your policy premium though it may take some effort. Just be mindful that you are getting the same covers and add-ons.
8. Pay using a cashback or rewards credit card:
While this may not seem like a direct discount, when you buy your insurance policy online, you can pay using a credit card and gain reward points on that. There are many cards that provide fuel for reward points and many others that provide straight up cashback. If you have multiple credit cards, you can check with the card provider as to which card will offer the best deal and make the payment using the same for a bit of indirect/deferred discount.
9. Reduce your IDV:
This is more of an emergency measure where you are crunched for funds. Insurance companies calculate your car insurance renewal premium based upon the Insured Declared Value (IDV) of your car. The IDV is the notional market value of your car and your premium is charged as a percentage of it. Insurance companies allow you to set your own IDV subject to certain rules and conditions. If you want cheap premium prices, you can reduce your IDV. Do keep in mind that reducing IDV will also reduce the amount you can get in policy claims.
10. Buy only third-party insurance:
This is the last resort and here you are completely foregoing ‘own damage cover’. This policy only serves the legal mandate of being insured with third-party cover. You are strongly advised against taking this route unless you either want to keep the vehicle in storage or plan to sell it as soon as you can.
All the above tips are simple and effective when it comes to saving a substantial amount of money at the time of car insurance renewal! Try them out and keep your premium cost as low as possible.
Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.
RELATED ARTICLES
Car insurance renewal tips to swear by
Benefits of Renewing Your HDFC ERGO Car Insurance policy
Right Time for Car Insurance Renewal