In India, every car owner must have third-party insurance. While it covers third-party liabilities in case of an accident, you would still have to pay for the damage to your car, if any. For wider coverage, you can opt for either additional own damage (OD) policy along with the basic third-party policy or go for a comprehensive policythat has features of both third-party and OD policies. While the premium for the third-party policy is regulated by theInsurance Regulatory and Development Authority of India (IRDAI) to ensure affordability for all, that for OD and comprehensive policies are decided by the insurance companies andhence, cost more. But with some planning and forethought, you can reduce the renewal premium without affecting thepolicy benefits. Here’s how you can do it.
- Online research
Nowadays, almost all insurance companies have an online presence and allow you to research, purchase and renew car insurance online. Before finalising a policy, you can compare the premium and policy features of different insurance companies and choose the onethat suits your needs and budget the best. You may also check for online discounts on your shortlisted policy to ensure you bag the best deal.
- Installing safety devices
Many insurance companies offer additional discounts for installing certain safety devices in your car or purchasing a membership inreputedautomobile associationssuch as the Automobile Association of India (AAI). Check for these discounts while buyingyour car insurancepolicy.
- Renew the policy before the expiry date
Policy expiration would result in the loss of your No Claim Bonus or NCB. Ifyour NCB lapses, you will not get the NCB-related discount on the policy. Therefore, make sureto renew your car insurance policyon time.
- Save the NCBs
Do not claim compensation for minor damagessuch as small dents, flaking, scratches etc. for which you may have to spend a smallrepair cost. If you do so, you will lose your valuable No Claim Bonus inthe process and ultimately miss out on the discount on your renewal premium. File a claim only when there is a major expense involved.If you do not make any claims fora few consecutive years, you can get a discounted premium of up to 50%. The NCBincreases for every claim-free year up to a period of five years.
| Policy period | No Claim Bonus |
| Preceeding year | 20% |
| Preceeding2 consecutive years | 25% |
| Preceeding 3consecutive years | 35% |
| Preceeding 4consecutive years | 45% |
| Preceeding 5consecutive years | 50% |
- Switch your policy
You are free to withdraw from an existing planif you find a better or less expensive plan. In that case, the insurer will return the unutilised car insurance premium amount. Transfer the NCBsfrom your existing policy to the new plan to avail of the benefits. For this, you must get your NCB certificate fromthe current insurer and purchase the new policy from a different insurer before cancelling the existingpolicy. Submit the NCB certificate to the new insurer so that your bonuses are transferred to the newpolicy.
- Mention the correct Insured Declared Value (IDV)
Mentioning the correct IDV will help you purchase the rightpolicy. The IDV of a car is the amount of money that the insurer will pay you if your car is stolen or irreparablydamaged. If you declare a very high IDVto gethigher compensation, it is bound to push up the policy premium. So, to reduce the present insurance premium, disclose accurate IDV and other details such as the manufacturing year of your car, RTO region, claims made in the past, etc.
- Long-term cover for your car
Purchasing long-term car insurance is another way of reducing insurance premium costs. Factors such as inflation are responsible for an increase in the premium rates every year. When the IRDAI fixes the rates of third-party insurance policies, they tend to increaseinsurance premiums by a certain percentage every year. Hence, every time you renew your policy, you are actually paying a higher premium for the same coverage. Securing your car long-term would prevent the effects of such fluctuations as the premium amount gets locked for fiveyears. The premium cannot increase within the tenure of the policy. Some insurance companies even provide discounts on long-term policies.
- Buy insurance online
You may get a discount from your insurer for online purchases. Most insurersoffer such discounts as there is no agent or broker involved in the process. This lowers certain costs for the insurer, which they share with you as a reward. This would reducethe OD or comprehensive policy premium to some extent.
- Voluntary deductibles
Carinsurance deductibles are beneficial as they reduce yourinsurance premium amount considerably. The higher the deductible, the lower would be thepremium. With a voluntary deductible, you have the right to choose the deductible amount as per your budget.For example, suppose you know you can affordto pay up to ₹10,000 in case of an untoward incident. You may choose this amount as your voluntarydeductible amount to save on the insurance premium amount.
These tips regarding minimising your insurance premium will help you get the best discounts and keep the premium within your budget. Choose the amount or percentage of a deductible carefully,as it will remain constant for all your claims. You need to be sure of yourbudget and how much risk you can afford to take. Make sure to pay your renewal premium within the specified dateso that you arecovered against all possible risks while driving your car. Also, save your NCBs for a good discount on the next policy premium.