A motor insurance policy is a must for every Indian citizen if they have a vehicle in their name. So, if you own a bike or a car, invest in a motor insurance policy for your vehicle to comply with the legal formalities.
Buying a motor insurance policy means paying a premium for the coverage. The premium of the policy depends on a lot of factors like the make, model, and variant, age of the vehicle, registration location, etc. However, there are a lot of ways in which you can save on the motor insurance cost. Do you know how?
Here are some tips to save motor insurance premiums –
1. Utilise the NCB to the full
For every claim-free year that you experience in your motor insurance policy, you get a no claim bonus (NCB). This bonus allows you to claim a discount at the time of renewing the policy. The NCB starts at 20% and goes up to 50%. You can accumulate the NCB if you don’t make claims in successive years. However, even a single claim reduces the accumulated no claim bonus to zero. So, while renewing, utilise the no claim bonus to the fullest. Also, try and avoid making small claims as they would nullify the NCB.
2. Choose a voluntary deductible, if economical
A voluntary deductible is when you undertake to pay a part of the claim yourself. Though this involves an out-of-pocket expense on claims, it allows you a premium discount. So, if you are a good driver and your claim experience is low, opt for a voluntary deductible. Weigh in the deductible amount and the premium saving and if the deductible proves economical, opt for it to reduce the premium.
3. Install safety devices in the vehicle
Safety devices bring down the chances of accidents and provide a layer of safety. This also leads to lower claims for the insurance company and so, the company offers a premium discount. So, safety devices not only lead to safe driving, but also help in premium savings.
For example, if your vehicle has an anti-theft device, your insurance premium would be lesser than a vehicle without one.
4. Buy online
Many insurers offer discounts if you buy the policy online. So, if you buy the policy online and there is a discount for the same, you can reduce the premium that you pay. Since online plans do not have any third-party intervention, they are usually cheaper than their offline counterparts.
5. Opt for third party plans if feasible
The Motor Vehicles Act, 1988, the Act that governs Indian traffic rules, stipulates the need for a third party policy on every vehicle. This policy protects you against third party liabilities if your vehicle causes a financial loss to any individual or property. However, if the vehicle itself suffers any damage, no claim is paid.
Third-party plans have restricted coverage and are not usually recommended. However, if you have a very old vehicle or if you use your vehicle sparingly, you can make do with a third party policy whose premium is very low.
6. Try the new ‘Pay-as-you-go’ policy
A new policy has been introduced in the motor insurance market called the ‘Pay-as-you-use/go’ policy. Under this policy, you have the flexibility to switch your coverage on or off depending on the usage of the vehicle. When you are using the vehicle, you can turn the coverage on and when you are not using the vehicle, you can turn the cover off. So, rather than paying the premium for using the vehicle throughout the year, you can pay the premium for the actual time that you use the vehicle and save on motor insurance costs.
7. Use your membership to your advantage
If you are a member of a reputed automobile association, you become eligible for a premium discount. So, use your membership to claim a discount and lower the premium cost.
8. Compare and buy
Last, but definitely not least, compare before buying motor insurance plans. More than a dozen insurers offer motor insurance policies and the pricing of each insurer is different. When you compare, you can check the premium charged by different insurers and then select a policy that charges the lowest premium without compromising on the coverage. It would, thus, help you reduce the premium cost and save.
Which of these tips would you use?
You can use a combination of these tips to bring down the premium of your motor insurance policy. All you need is a little knowledge and a look into the policies available in the market. Compare the available plans and look for the best deal. Then buy the best motor insurance policy which offers the most suitable coverage without charging a bomb.