Now in a de-tariff era, new parameters are being considered to determine the car insurance premium rates
CARS can not only drive your family around town, they can also make a dent in the household budget. One such cost is auto insurance, which is a pre-requisite to vehicle ownership but comes with a big tag. However, it is possible to save money on your car insurance if you understand what factors affect your premium.
Insurance companies have various clauses under which one can avail of premium discounts on auto insurance. Understanding these features can help a customer be aware of what discounts can be availed, the eligibility for these discounts and whether these discounts makes sense financially.
Moreover, the criteria for premium rating parameters has changed beyond the four parameters prevalent earlier, viz. geographical zone, engine capacity, price and age of vehicle. Now in a detariffed era, several new parameters are being considered to determine the premium rates, thus providing various ways to lower your insurance bill
You can, for instance, lower the premium by 10-30% simply by giving correct and proper information to the insurer. Thus, it is not always about getting a quote from a newer insurance company, but a few simple steps and paying attention to detail may help you save on your car insurance. Here they go:
No claims' discount/bonus:
If you haven't claimed against your car insurance policy in a given year, you get the benefit of 'no claims' discount in the form of a specific percentage reduction in your premium in the subsequent year. No claim bonuses increase with each claim-free year and typically start with 20% and go up to a maximum of 50% on the 'Own Damage Premium' component of your car insurance.
Voluntary deductible discount:
Insurers offer you a discount on your vehicle premium if you bear a certain amount of loss associated with each claim. Voluntary deductible is the amount that you agree to pay yourself towards a claim before the insurance company picks up the balance. The higher the voluntary deductible that you agree for, the lower your premium. The discounts associated with this feature typically range between 20% and 35% of the premium, subject to a maximum of 3,500. However, one needs to review the amounts of voluntary deductibles against the discounts to ensure that the discount amount will actually be higher than the voluntary deductible.
Make and model of the car:
Each make and model has its own claim record and the insurer prices the vehicle based on its claim experience. Some models may be more claim-prone because of their structure or usage, and the premium will factor in all these facets. Some make/models have prohibitive repair costs. Discounts may even depend on repair cost charged on certain make/models.
Driver's gender:
The gender of the driver can also help lower the motor insurance premium. However, whether male drivers would get more discount or female drivers, depends on the policy of the insurers. Some insurers like Bajaj Allianz, for instance, consider female drivers better than male drivers, and therefore give them some discounts. A handful of other insurers, however, give discounts to male drivers. However, this practice is more prevalent in the west, and is yet to catch up in India.
Profession of the driver:
The occupation of the customer, to a large extent, determines the usage of the vehicle. For instance, an office goer will mostly use the vehicle only to commute between office and home, whereas a person in retail trade will use it more extensively plying across the length and breadth of the city.
City details:
The city where the vehicle would be driven is also taken into consideration now. From the earlier two zones, now cities and towns where the vehicle is plied or registered are taken into consideration.
Membership discount:
If you are a member of a recognised automobile association in India, you are eligible to get a discount on your car insurance premium. These discounts are available for 5% of the 'own damage' premium, subject to a maximum of 500.
Anti-theft devices:
If you have installed anti-theft devices in your vehicle approved by ARAI (Automotive Research Association of India), you are eligible to get a discount of up to 500 on your premium.
Discount for physically challenged persons:
A discount of as high as 50% is available on the own damage premium for physically challenged persons provided that the vehicle has been modified for use. The discount is also available for institutions exclusively engaged in the service of these people. Apart from these, there are other things which can help you lower the premium. For instance, some insurers like Royal Sundaram and Bajaj Allianz offer a higher discount when you buy or renew a private car online. You can also avail a concession if your vehicle is garaged or is out of use for some period (minimum of two months). In this case, however, intimation to the insurance company is essential.
