Awareness is key to reduce your car insurance premium

You can ask for higher discount even based on your car model. It’s not just the price that you should consider while buying a car, but factor in what is known as ‘cost of ownership’, which includes fuel prices and possible hikes, average minimum distant that one has to cover per day and insurance. An insurance policy is all about being adequately covered for eventualities.

There are more issues than one that are linked to car insurance. Normal wear and tear and general ageing of a vehicle, mechanical or electrical breakdown, damage to or by a person driving any vehicle or car without a valid licence, damage to or by a person driving the insured vehicle under the influence of drugs or liquor, are some of the things not covered under car insurance.

One must know how one can reduce premium. “This can be done by accumulating no-claims bonus, opting for a high voluntary excess amount, installing safety devices in a vehicle, applying for a loyalty discount, just to mention a few,” said a top official of a private sector general insurance company.

He said even car model plays a part and a policyholder can ask for a higher discount if there are lesser number of accidents reported involving your car make or model.

Similarly, if a car is likely to be driven on highways, insurance companies consider that to be more prone to accidents. In such cases, claim amounts are huge. Compared to this, in a metro or a congested city, claims for scratches and dents are more, due to the presence of heavy traffic or narrow roads. Women get a higher discount, as they are considered to be safer drivers.

While one should negotiate the premium and discounts on the basis of these factors, one can bring down the cost simply by paying a high voluntary deductible – an insurance option where as a policy holder you agree to pay out of your pocket for small claims of minor damages and the insurance company pays only for the damages exceeding the limit of voluntary deductible. Voluntary deductible discount can go up to 35 per cent of the premium for vehicle damage.

The depreciation in value of a car due to usage is also reflected at the time of a claim. In such cases, a ‘nil depreciation rider’ always proves to be a useful protection.

Other than that, small things like installing anti-theft or other safety features of an approved make can lead to insurance companies offering you a discount of 2-5 per cent on the premiums. Some insurers also offer a higher discount for online policy purchase.

You can also think of switching your insurer for lowering the cost. But make sure that you don’t switch in between a term, and get a no claims bonus eligibility certificate from the existing one. You better buy a new policy and then cancel the existing one at the time of renewal. Otherwise you may lose out on many benefits and may have to pay penalties on top of it.