At the time of a car insurance renewal, most policyholders would continue with the same insurer and coverage. They do not pay heed to the fact that there are a plethora of options available in the market today, that could present them with adequate coverage on reduced premiums. The options provided by insurers for slashing premiums are in the form of add-on coverages and discounts that should be carefully chosen.
Here, we elaborate on car insurance discounts that could help in bringing down your premium to a competitive value:
- Voluntary deductibles
The part of a claim amount that is borne by the policyholder is called a deductible, and it has two components - Voluntary and Compulsory.
The compulsory deductible is a fixed amount that the insurer informs in advance to the policyholder. The voluntary deductible is an amount that the policyholder volunteers to pay when he raises an accident claim. This amount is also predefined in the insurance policy, and should be furnished before the insurer reimburses the remaining amount.
An increase in the voluntary deductible amount corresponds to a lower premium. But while opting for this, you should be aware of the fact that you will be required to bear a larger amount of expenses at the time of a claim.
- No-Claim Bonus (NCB)
The NCB is a discount in premium that is offered by the insurance provider to the car owner for not filing claims during the term of the . Effectively, this is a reward given to the policyholder for judicious use of the vehicle. If needed, the NCB can be transferred to a new insurance policy by the vehicle owner. This is because the discount is associated with the owner of the vehicle and not the car.
The NCB contributes to a significant discount in premium, ranging from 20% to 50%, for subsequent claim-free years. A policyholder can continue to avail the NCB only if the policy is renewed within 90 days of the expiry date.
- Discounts based on profession
Some insurance providers offer discounts based on the profession of the policyholder. So, for instance, if you are a doctor or work in the armed forces, you will be eligible for such reductions in premium.
- Discounts based on age
Discounts in premium are offered to people of a certain age group.
- New drivers and teenagers are offered much higher premiums because they are statistically found to be more slack in their driving, when compared to more experienced drivers. They have been found to have a greater tendency for overspeeding, and more often than not, tailgate the car in front of them. The instances where teenagers were found driving without seatbelts are also higher in comparison.
- Drivers in the age group of 25 to 65 years are benefitted the maximum from this car insurance discount. However, a good driving record and a favourable credit history are valuable in availing this reduction in premium. Additionally, the model and make of the car, the area where it will be parked, and the distance that it is usually driven for also influence the premium amount.
- After a driver crosses 65 years of age, his car insurance rates start creeping up. This is due to the insurer’s assessment of age-related risks, such as impairment in vision, use of medicines, and poorer cognitive abilities. Older adults are also found to be involved in more serious accidents when compared to younger drivers.
- Membership in AAI or WIAA
All insurance providers recognise members of the Automobile Association of India (AAI) and Western India Automobile Association (WIAA) by offering them a fixed discount in premium.
- Installation of security devices
If your vehicle has been installed with an anti-theft device that is approved by the Automotive Research Association of India (ARAI), then you are liable to receive a discount on your car premium. Since this discount is offered with all types of insurance policies, it is wise to get your car updated with the relevant security systems.
- Discount on own-damage
This is a discount offered by insurance providers to drivers who possess good driving records. These drivers are considered to have lesser risk of accidents, and are safer on the roads.
- Reduction in third-party insurance coverage
Car owners can request for a reduction in the amount of coverage provided as part of third-party liability. When the insurer provides you reduced third-party cover as part of your auto insurance, they also slash the premium accordingly.
Armed with the above information, you will be able to research online and identify an appropriate insurer and policy, with an attractive premium to suit your needs.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017