Car insurance is a mandatory annual expense if you drive a vehicle in India. Based on your area of residence, the rates could be high or low. At the time of policy purchase, even though you may come across insurance agents who are willing to help you bag the best deal on premium, it is always wise to do your fair share of research before deciding on a policy.
When renewing car insurance, it is often seen that customers tend to continue on the existing policy for the sake of convenience. However, it is crucial that you explore the options available to you before doing so. You may be able to get a policy with a better coverage in a more cost-effective manner; so do not miss out on that opportunity!
This article helps you understand how you can benefit from a switch and how to go about doing that.
Why Should You Switch Insurance Companies?
The answer to this question is dependent on the experience you have had with your current insurer. Other reasons for a switch include:
- You just shifted your place of residence
- Your insurance company increased the premium
- The customer care service of your car insurance company is below par
- You will soon be adding a new driver under your insurance
You should never underestimate the potential difference in cost between the plans offered by two insurance companies in the same city. You will never know if you can get a better deal unless you shop around.
How To Change Insurance Companies
Industry experts are of the opinion that you should look to change your insurance company every three years. Listed below are the primary steps involved in accomplishing a successful switch:
- Compare policies - This would be your first step in the pursuit of an ideal insurance plan. Several neutral financial websites allow you to compare car insurance plans between multiple insurers in the market, free of cost. Make use of this facility to gain big!
- Investigate the insurance company - Before you decide on a policy you should read about the insurer and get an idea of their claim settlement statistics. You can also read about the customer service the insurer provides. So, do not sign up with an insurance company just because it offers you a cheaper policy. You should pick an insurer with a good reputation and performance in the industry.
- Get maximum coverage - Buying the minimal level of insurance will help you to stay on the safe side of the law. However, it may not protect you adequately after an accident. So, buy the maximum coverage that you can afford.
- Cancel your current policy - When you have decided to switch insurers, make sure that you inform your current insurance provider through a written notification. This makes sure that your current insurer doesn’t continue to bill you for the insurance coverage.
Such an incident may reflect poorly in your credit report. So, ensuring that the old plan is cancelled is a sure-shot way to avoid such complications.
- Be honest - When applying for a new insurance policy, you should furnish details about your driving history in an honest manner. If you withhold important information or provide inaccurate details, your insurer is likely to find out. This may lead to higher premiums on insurance or the denial of a claim.
- Drive safely - When a new policy is less than 3 months old, it is advisable to not raise any claims. Your new insurer may even drop you for the same. So, be careful and drive safe in the first few months of your new insurance coverage.
When Should You Inform Your Current Insurer?
When you have decided to switch insurance companies, you should inform your current insurer at the earliest. A 30-day notice prior to cancellation will work well.
An advantage of informing your insurer of the switch early is that it will provide them enough time to win back your business. If you have been a diligent driver with a great driving record, your current insurer may offer you a better deal on car insurance renewal premium. You may not have known about your qualification for some of the discounts the company offers you at this point of time. If your current insurer is able to match the best available deal, you can reconsider your decision of a switch.
Are There Cancellation Charges?
It does not cost much, or even anything, to change insurance companies:
- At the time of policy renewal, you will not be required to pay anything for a switch.
- If you are cancelling mid-term, your insurer is likely to reimburse the premium you paid on a pro-rata basis.
All that you need to be careful about is the gap in coverage. You certainly do not want to cancel your existing policy and have a gap before the coverage under the new policy starts. Driving your car with a break in insurance will attract heavy penalties. If the duration of the break in insurance is high, the new insurance company may even charge you a higher premium at the time you get around to buying a policy.
Downsides Of Changing Insurers
Some of the disadvantages of shifting insurers are as described below:
- Some insurance companies offer loyalty discounts that you will miss out on when you switch.
- In case you have other insurance policies with your current insurer you may lose out on bundling discounts.
- You may take a while to form a trusted relationship with your new insurance provider.
Hence, you should weigh out the pros and cons of shiting insurers and make a judicious decision.
In conclusion, with the availability of multiple car insurance products in the market, staying loyal to just one may not be the best option. Premiums fluctuate year on year; so the most optimum car insurance you are eligible for will also vary. As long as you maintain a healthy driving history, provide sufficient notice to your insurer, and avoid break in insurance, you are likely to enjoy better premiums through a car insurance switch.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017