Auto insurance in India is a legal requirement, and an expensive one at that. Certainly, there is no way you can escape from auto insurance for your vehicle, but there are ways which will allow you to save on the insurance premium.
Earlier the premium rating parameters were geographical zone, engine capacity, price, and age of the vehicle, but thankfully that has changed now. Currently we have several new parameters that are considered to determine the premium rates. Let's take a look at some of the most common ways that will allow you to reduce your car insurance premium.
Each make and model of a car has its own claim record, and the insurer fixes the premium based on its claim experience. So, if a car is more claim-prone because of its structure or usage, the premium will be higher. Any discount on insurance premium depends on the past performance of the make/model in the books of the insurer. Discounts also depend upon the on repair cost charged on certain make/models.Gender of the driver can also help reduce the insurance premium of a vehicle. While some insurance providers such as, Bajaj Allianz, tend to consider female drivers better than male drivers and offer them more discounts, others give discounts to male drivers. However, this practice is more prevalent in the west, and is yet to pick up pace in India.
Auto insurance premium also depends on the city where the vehicle would be driven. Earlier there were just two zones, but now there cities and towns where the vehicle is plied or registered is taken into consideration to decide the premium. Some insurance companies are also doing location-based claims analysis to calculate the premium. Claim rates are usually higher in location with congestion or high density of vehicles, rough terrains etc.
Surprisingly, even the profession of the customer is also taken into consideration, because it determines the usage of the vehicle. For example, a person who goes to office will use the vehicle only to travel between office and home most of the time. But a person in the retail business would use the vehicle to travel across the city.
If there was no claim preferred during the currency of the expiring policy, premium for the renewal of the policy is discount. This discount is given as a percentage on the 'own damage premium' and the same is increased every year to the next slab if a claim for damage to the vehicle is not preferred. This discount is known as 'no claim bonus (discount)'.
This discount can go up to 50% and the discount stays with the policy holder even if the vehicle is sold or if the owner wants the policy to be transferred to another vehicle owned by him/her.
You can opt out of small claims for minor damages if you so wish. For this you can avail voluntary deductible discount, which can go up to 35% of the premium for vehicle damage. If you choose this cover, you voluntary agree to pay the stipulated amount of claim and the insurance company will pay a claim only for the damages in excess of this limit of voluntary deductible. You can save on the premium this way too.
If you were planning to install an anti-theft device or other safety features in your car, we would recommend you go for it. A car's safety features play an important role in determining the insurance premium. However, it is essential to fit an approved make to claim the discount.
If you happen to be a member of any designated automobile association, you are eligible for a good discount on 'Own Damage' premium (applicable for private car and motorized two wheeler policies). A maximum of 5% is given on the own damage premium, subject to a maximum of Rs 200/- for a private car and Rs 50/- for a two-wheeler.
If you are not going to use the vehicle for some period (minimum of two months), you can restrict your policy to only parking risks and then you can avail a concession during the renewal of the policy. You can choose either to extending the period after expiry or a credit to the renewal premium. Intimating the insurance company is mandatory if you want to do it.
Some insurers offer good discounts on online purchase or renewal of auto insurance. This is mostly because when you buy/ renew insurance online instead of going through a third party, the insurance company saves a good deal of money on processing and distribution costs which are passed on the customers.
