There are many expenses that come along with owning a car. These include expenses related to repair and spare parts, regular maintenance, fuel costs, along with car insurance – which is mandatory per the law of the land. While some of the other expenses are out of your control and you can do precious little to rein them in, there are several ways in which you can keep a tab on auto insurance premium outgo and try and reduce your premium amount. It is worthwhile noting at the outset that the underwriting parameters used by insurers vary. The risks are broadly categorized as vehicle-related, experience-related, location-related and driver-related. In other words, the vehicle make, engine capacity, claims history, your age, profession, etc., all have a bearing on insurance premium. Any modifications done to your vehicle such as fitting alloy wheels, or other accessories will alter the premium outgo.
So let’s look at various ways to reduce your auto insurance premium outgo:
1. Discount Search: There are several types of discounts that one can avail while paying your auto insurance premium. No Claim Bonus is one such opportunity. A No Claim Bonus is given if the insured does not make a claim in the first year of being insured. Besides this, discounts are available if the insured has a valid membership of a recognized Automobile Association such as Automobile Association of Eastern India, Automobile Association of Southern India, etc.
If you have subscribed to a comprehensive insurance policy, you could be rewarded for a good claims history with a discount on the premium paid.
2. Voluntary Deductible: If you have had a good track record in driving and haven’t met with any accidents, then you can consider increasing your voluntary deductibles. For the uninitiated, a deductible is a sum that you agree to pay as part of the overall claim made. If you opt for a higher voluntary deductible, it will decrease your premium outgo as you have agreed to bear a part of the expenses in the event of a claim. However, it is important to exercise this option with caution. As a lower premium outgo could also lead to a substantially higher risk.
3. Loyalty Discount: Many insurers extend a loyalty discount if you continue to renew your policy with them. Check if the insurance company with whom you have your current auto insurance policy provides a loyalty discount. If yes, what is the percentage? You can also do a quick comparison to check the percentage savings you stand to benefit if you decide to switch.
4. Discounts for Professionals: Insurance companies extend special discounts to gazetted officers, high ranking government servants, army officers, doctors, lawyers, and other professionals. Check if you are eligible for a discount on this front.
5. Vehicle Type: High-end sedans, sports cars, and other such expensive cars attract a higher premium. Premium is determined based on a number of factors including engine horsepower (the higher the horsepower, the higher the premium outgo), cost of spare parts replacement, price, etc.
6. Track Record: One of the most important determinants of auto insurance premium is the driver’s track record. If you have a clean track record, you are likely to have a lower insurance premium as compared to someone with a spotty driving record with violations registered in the recent past as well.
7. Number of Kilometers: This might come as a surprise to some. However, the lower your car usage, the less you will pay for auto insurance premium. This is simply because, the higher your usage, the higher the chances of your vehicle meeting with an accident. Many people use car-pooling as an option to cut-down on their vehicle usage and thus reducing their miles significantly.
8. Comprehensive Cover: A comprehensive motor insurance costs much more than the mandatory Third Party Motor Vehicle Insurance – this is because the extent of cover available is also much higher. Needless to mention, the premium outgo is also much higher for a comprehensive cover. Now, you will need to assess if you need a comprehensive cover, given your vehicle condition, age, your own driving track record, cost of the vehicle, etc.
9. Anti-Theft Device: Equipping your vehicle with an anti-theft device often earns you a discount on your vehicle insurance. Again, this is available only for anti-theft equipment approved of by automobile bodies.
10. Multiple Policies: If you have more than one policy, with your current insurer i.e. if you own more than one vehicle and have bought insurance policies from the same insurer, this could get you a discount as well.
While there are several discounts and benefits available that you can obtain from your current insurer, you will need to ensure that you have renewed your policy in time and that your policy has not lapsed for non-payment of premium in time. If your policy lapses, it will disqualify you from discounts that were hitherto available including bonuses you might have earned on account of No Claims in the pasts.
Your best bet to reduce your auto insurance premium is to compare your insurance premium online. Clearly, there are many ways in which you can save on your auto insurance costs. The ones listed above are a few ways in which you can reduce your insurance premium. Also, not all of these options might be available with your insurer. It is recommended to use your judgment to make the most of your insurer’s offerings.