A car insurance policy is a mandatory cover as per the Motor Vehicles Act, 1988. So, if you have a car you need to have a valid car insurance policy on it. Being mandatory doesn’t mean that the car insurance policy would be expensive. If you, however, feel that you are paying high premiums for your car insurance plan, it is time for a reality check. There are ways in which the car insurance premium can be reduced. If your premiums are high, you need to check if you are committing any of the following common mistakes –
Not comparing before buying
You would find most of the general insurance companies offering a car insurance plan for your vehicle. All these plans differ in terms of coverage benefits and premium rates. To ensure that you get the best premium rate you should compare first and buy later. Comparing not only lets you reduce your premium expense, it also allows you to choose the desired coverage benefits. So, if you are buying a policy without comparing, you are definitely making a mistake which makes car insurance expensive.
Choosing the wrong type of policy
Car insurance plans come in two variants – liability only and comprehensive plans. Though comprehensive plans are better for a more inclusive coverage, they are not very useful if you use your car minimally. If your car’s usage is limited, you can make do with a third party liability only policy which would be much cheaper and provide the mandated legal liability cover.
Opting for a higher IDV
The Insured Declared Value (IDV) of your car is its market value after factoring in depreciation. A high IDV is preferable since it ensures a higher claim settlement. However, in some cases, a higher IDV doesn’t make much sense. It simply makes car insurance expensive. For instance, if you have an old car which you are thinking of replacing soon, opting for the highest available IDV is unwise. For such an old car, lower IDVs are better which would help in saving the premium cost.
Opting for unnecessary add-ons
Add-ons are important coverage features which enhance the scope of coverage. However, they come at an additional premium. Though you should opt for add-ons, you should cut down on unnecessary ones. For instance, if you are living in a flood-free area, an engine protect rider us useless. Similarly, if you don’t take your car on long road trips, a roadside assistance add-on doesn’t prove very relevant. So, cut down on the frills. Go basic with your car insurance policy and avoid unnecessary expenses.
Not choosing discounts
A car insurance policy offers attractive discounts which help in lowering your premiums. Check whether you have availed all the possible discounts or not.
Not using the accumulated No Claim Bonus (NCB)
Your car insurance policy allows you a NCB discount if you don’t make a claim in any policy year. This discount also increases every claim-free year. So, when renewing, you should check whether the applicable NCB discount is applied to your renewal premium or not.
Not choosing voluntary excess
Voluntary excess is the portion of claim which you choose to pay yourself. As you choose to shoulder a part of the claim, the insurance company’s liability reduces. As such, the insurer allows you a premium discount. So, if you are a careful driver and don’t get involved in accidents frequently, you can choose a voluntary excess and earn a premium discount.
Making small trivial claims
While your car insurance policy allows you a premium discount for not making a claim, the discount is completely lost if you make a claim any year. Therefore, it is always advised to pay for smaller claims from your pockets. For a small claim amount you should not lose out on the accumulated No Claim Bonus. If you are making trivial claims, you should consider stopping this practice.
Having a bad driving record
If you are a reckless driver with a bad driving record, your premium would be higher. Since frequent claims are made on the company, the company, usually, increases the renewal premium for policyholders with a bad driving history. You should be more careful when driving if you are to reduce your car insurance premium rate.
Lapsing your policy
Car insurance plans are annually renewable plans. If you lapse your existing car insurance policy, any subsequent renewal would involve higher premium amounts. Given the mandatory nature of the plans, you have to avail coverage for your car. In this scenario, not renewing your car insurance policy on time is a mistake. You would be charged a higher premium and might also lose out on the accumulated no claim bonus if renewal is not done within 90 days.
Which mistakes are you making which are driving up the premium of your car insurance policy? Find out and rectify them to enjoy lower premiums.
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