When Should You Change To A Different Car Insurance Company?

Car insurance is a mandatory expense for a car owner in India. When buying motor insurance, you should do a good amount of research and settle on a policy that offers adequate coverage. With that being said, the competition in the auto insurance space gives rise to potential for saving on insurance premiums. You need to carefully monitor the offerings in the market and compare policies between insurers. This is particularly relevant in a scenario where your financial circumstances have changed.

Changing insurance providers is a very simple process, and can be done at any point of time. It is not mandatory to wait for the existing policy to expire before initiating a switch.

When you do get around to changing insurers, it is necessary to evaluate your needs and your eligibility for discounts. This will go a long way in helping you save on auto insurance premium.

When To Switch:

It is recommended that you check for better motor insurance deals every two years. But at a minimum, you should explore the offerings in the market when you reach certain milestones in life, such as:

  • Change in marital status - Some companies offer better rates on car insurance premium for people who are married. So, ensure that you notify your insurer about your nuptials. This way, you may get a better deal on car insurance premium. You should also explore whether another insurance company is offering you a more attractive deal.
  • Home ownership - Several insurance companies offer discounts on motor insurance premium when the car owner’s status changes from that of a renter to a homeowner. So, you stand to gain from this change in status.
  • Addition of new drivers - When you add new drivers to your car insurance policy, there is bound to be a change in the premium. So, stay abreast of the offerings in the market at this point of time.
  • Change in employment or residence - You may receive a better rate on your car insurance if you shift to a location that is closer to your place of employment. This way, the daily usage of the car will reduce, rendering it safer to insure from the perspective of the insurance company. Change in employment could also attract better car insurance premium; so you will have to check with the insurer on your eligibility for the same.
  • Age and experience - When a driver reaches specific age thresholds, he/she is eligible for better rates on auto insurance. For instance, insurance companies regard drivers above the age of 25 years to be of lower risk than younger drivers. Also, if you have been driving carefully without any accidents in the last five years, your premium could reduce.

Apart from the life events elucidated above, you may also decide to switch car insurance providers under the following circumstances:

  • Increase in premium - Insurance companies review their overall risk for a specific customer base and modify policy pricing at regular intervals. This implies that your car insurance company may charge you a higher premium at the time of policy renewal. However, you should be aware that there is a glut of competitors to choose from. Effectively, you can get the exact same coverage from several insurance companies at varying costs. It is completely possible that you may find a policy (from a different insurer) for which you will be required to pay only a fraction of the price you are paying now. So, explore the options in the market to hit upon a better deal.
  • Availability of cashless garages - Cashless claim settlement is a very attractive benefit in car insurance, wherein you can get your vehicle repaired at a network garage without having to pay for the repair work. The finances will be settled directly between the service centre and the insurance company. If your current insurance company is not offering you a wide network of cashless garages to choose from, you can explore other options in the market.
  • Inadequate add-on covers - Car insurance companies offer add-on covers to amplify the coverage offered by a basic comprehensive plan. In case you are prone to specific risks, you may be able to find the right sort of coverage for your vehicle through add-on covers. For instance, a comprehensive car insurance plan does not offer coverage for engine damage due to waterlogging. In case you live in an area prone to floods/waterlogging, it is advisable to get an engine protect add-on cover to supplement the coverage under your comprehensive policy. This add-on cover will protect the engine from damages due to floods and the like.
  • Issues in customer servicing - If your car insurance provider is not offering good customer service you can consider switching insurance companies. Also observe how the claim adjusters and company representatives deal with the service centres where your car is repaired. It is important to keep track of these things, as these indicate the work ethics followed in the organisation.

It is completely possible that your current policy is in line with all your present insurance needs. If it is not, though, use the guidelines mentioned below to select another insurance company.

How To Switch:

After you have made a decision on executing a switch, there are several things you should bear in mind for a smooth transition:

  1. Compare policies - It is recommended that you visit neutral insurance broking websites and compare car insurance plans between companies. This way, you will get a clear picture of the various products in the market and the corresponding costs.
  2. Inform your current insurer - All insurance companies would fight hard to not lose a good customer. It would come as a surprise to you how quickly your insurer would offer competitive discounts once you hint at leaving. You should also check whether you are eligible for other perks, such as multi-policy discounts or loyalty discounts.
  3. Check for penalties - Once you have finalised on shifting insurers, you will have to find out if your current insurance company levies any penalty for doing so before the end of the policy term. Most insurers allow you to switch in the midst of a policy year as long as you provide sufficient notice period. Typically, the premium that was already paid will be returned on a pro rata basis.
  4. Investigate the new company - Before signing on with a new insurance company, you should investigate thoroughly. You can read reviews online and check the insurer’s claim settlement ratio to get an idea of its reliability. You should never sign on with an insurance company solely on the basis of lower premium that it is offering. The premium could be low due to a myriad of factors such as poor claims service, high deductibles, limited coverage, etc.
  5. Avoid break in insurance - When changing insurance companies, you should ensure that there is no gap in coverage. Effectively, you should not cancel your current insurance policy before the coverage under the new insurance plan commences. A lapse in insurance could result in serious financial and legal challenges, particularly if you were involved in an accident. Having a break in insurance could also mean that you will be charged higher premiums at the time of renewal or reinsurance.
  6. Ensure cancellation of the old policy - When you shift between insurers, you should ensure that you end your existing policy through a written notification to the insurance company. You will have to follow up and get a confirmation from the insurer as well. This will help you in two ways:
    1. It ensures that the insurance company does not continue to charge you the premium.
    2. It protects you and your credit history so that you will not be reported for non-payment to the credit bureaus.
  7. Refrain from raising claims on a new policy - If you have bought a new insurance policy, you should be careful when driving, so that you do not end up raising claims under it. You should ideally refrain from raising claims under a plan that is less than 90 days old, as this could lead to the insurer dropping you.

Final Thoughts:

With multiple insurance companies offering you substantial coverage at attractive costs, it only makes sense to explore other options at the time of a car insurance renewal. As long as your driving record is free of blemishes, you have provided ample notice to the insurer, and you have managed to avoid break in insurance, you can safely switch to a new insurer and enjoy better policy pricing and coverage.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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