How to lower your car insurance premium without compromising coverage

According to the Motor Vehicles Act of 1988, any vehicle running on the road must have a valid insurance policy. Car owners must have at least third-party insurance for their cars. If you drive a car without insurance, you must face penalties and legal consequences.

In FY24, insurance premiums, including car insurance premiums, have increased 13.1%. This surge will likely continue, primarily due to rising inflation. Reducing coverage only to save some amount on premiums is not sensible. So, what are the other alternatives to saving money on a car insurance premium without compromising coverage? Before diving into those strategies, it’s important to first understand why car insurance is necessary and the factors that influence your premium. This knowledge will help you make more informed decisions about how to lower your premiums without sacrificing necessary protection.

Why do you need a Car Insurance?

The third-party liability insurance covers damage and loss to third parties. If a car accident involves your car and one of the third parties suffers a loss, your insurance will cover such cost. However, such an accident can also cause you losses. Your car may get damaged, or you may sustain injuries. With just third-party coverage, you must pay for car repair and medical expenses from your pocket.

Opting to increase coverage by choosing a comprehensive insurance policy will boost your insurance benefits. In the same scenario above, your comprehensive insurance policy will also cover the damages you face.

The cost of comprehensive car insurance will be higher than basic insurance. Remember that no amount can be placed on the peace of mind that you can enjoy knowing your insurer will compensate for vehicle and personal damages. 

Factors that influence car insurance premium

The premiums for car insurance vary depending on the individual and their car. Some factors that your insurers take into account before setting rates on car insurance are:

• Car's Age: Older cars attract higher insurance premiums as they break down more often. This enhances the risk factor for the insurers; hence, they charge a higher premium.

• Make and Model: Luxury cars are expensive to repair and maintain. Insuring such vehicles is costly. Regular SUVs are less expensive, and the spare parts would be easily available.

• Coverage Selected: Comprehensive coverage is broad and more costly than third-party liability insurance. 

• Engine Size: Cars with large engines incur a higher repair cost. So, large-engine cars are more costly to insure.

• Location: Where you live also influences your insurance rates. If you live in a flood-prone area or a region with a higher crime rate, your insurance premium will go up.

• Claim History: Those not making frequent claims will be quoted lower rates. A person who claims multiple times for minor repairs will be quoted higher premiums.

• Modifications: You can customise your car any way you like. However, these modifications result in higher insurance quotes because they increase the value proposed. 

How can I lower my policy premium?

You do not necessarily have to cut coverage to minimise the policy premium. Here is how you could lower your car insurance premiums:

1. Compare quotes

The best way to get the right insurance premium is by comparison shopping. Get quotes from multiple insurance companies, and take the time to compare. Compare your options for coverages, add-ons, etc., before deciding. 

2. Install safety features

Most insurers discount the premiums if your car is equipped with safety features. Check for devices such as a tracking system and alarms that help to minimise car theft chances.

3. Have a good driving record

Those drivers who take all the appropriate safety precautions enjoy lower premium quotations. Age would be a part of this deal, but if your record is untainted, negotiate with the company, and they'd bring those premiums down.

4. Choose higher deductibles

For insurance policies, deductibles are the amount of money you pay upfront out of your pocket before your insurer needs to cover it. The higher the deductible, the lower your insurance premium. However, you must make this decision very carefully because it will also mean you must pay a large sum out of your pocket before making the insurance claim. 

5. Explore add-ons

Several car add-ons are available, like zero depreciation cover, roadside assistance, etc. Understand what these entail and how they may impact the driving experience. A person who owns a car solely for a few kilometres of travelling to work because they reside within an urban area, might not want roadside assistance. On the other hand, people making long journeys in their cars will find it essential and comforting to carry roadside assistance coverage.

6. Avoid small claims

As you drive your car, you will inevitably hit a few potholes, and there might be a few scratches and dents. Though comprehensive cover for your vehicle may cover the damages, do not lodge small claims. It will help you benefit from the No-Claim Bonus (NCB). Some insurers provide premium discounts for people who have accrued NCB.

7. Avoid aesthetic alteration

Any change you make with your car attracts insurer scrutiny. Though many aesthetic changes are available, they may increase insurance costs because of added repair costs. 

8. Prevent policy lapse

In India, you cannot drive a car without insurance. Paying policy premiums on time is necessary to prevent a policy lapse. Driving without insurance will increase the driver's perceived risk. So, the insurer may quote a higher premium the next time you try to buy insurance. You can use insurance mobile apps to get reminders about policy due dates so that you pay premiums on time. 

Conclusion

It only makes sense that people consider alternative ways of saving on car insurance premiums with increasing inflation costs. Prudent decisions about add-ons and coverage can ease your financial burden. But at the same time, do not sacrifice coverage for a few thousand rupees. Insurance policies come to your rescue only in emergencies, and you do not want to grapple with large bills when an accident occurs. So, compare other policies, go for comprehensive coverage, and manage costs through add-on covers.

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ARN: Zuno/Marketing/Blog/How to lower car insurance premium/03/25/03