6 Tips to reduce your automobile insurance premiums

• Avoid claiming small expenses:

  If you don't make a claim on your automobile or car insurance during a policy year, you will be entitled to a no-claim bonus (NCB). No claim bonus can be around 20%, which means that if you do not make any insurance claim in the policy year, your insurer will give you a discount of 20% on your next year insurance premium. Let us assume, your car insurance premium if Rs 10,000. If you are near the end of your policy year and incur an expense of Rs 1,000 on say, repair of a damaged bumper, you should consider paying it yourself instead of claiming it from the insurer. By paying for the expense yourself, you can save Rs 2,000 on your next year premium. For small body work repairs (e.g. dent repair, broken tail light etc.), consider visiting your trusted local workshop instead of the service centre. It will cost you much less. Also remember, if you do not claim insurance for a few consecutive years, your no claim bonus will increase to as high as 50 – 60%.



• Install Anti-theft devices in your car:

  Installing anti theft devices in your car is always a good idea, given the rise in incidents of car thefts. But did you know that, by installing an anti theft device in your car you can also reduce your insurance premiums, by as much as 5%. Some insurers also like safety features in your car like air bags etc and may evaluate you favourably.



• Avoid adding expensive gadgets in your car:

  If you add expensive gadgets in your cars, like ultrasonic sensors, automotive night vision etc your premium will increase. Also if you make modifications to your cars, like adding spoilers, alloy wheels, exhaust modifications etc your premium is likely to go up, since the insurer may make unfavourable assumptions about your driving style based on the modifications. Avoid adding expensive gadgets and making modifications as much as you can. If you do want to make modifications, even at the cost of higher premiums, you should definitely notify your insurer, no matter what the nature of modification is. Failure to notify your insurer about any modification may results in your insurer invalidating your insurance.



• Evaluate voluntary deductions carefully:

  Voluntary deduction is the amount the insured has to pay in case of an accident. If your voluntary deduction is zero, then you will receive your entire claim amount in case of an accident. If your voluntary deduction is Rs 2000, then you will have to pay Rs 2000 while the insurer pays the balance claim in case of an accident. By opting for higher voluntary deductions, you can lower your premium amount. But you should be careful. Your insurance premium will not be lower to the extent of additional voluntary deduction that you opt for. For example, let us assume your car insurance premium is Rs 12,000. If you opt for Rs 2,000 voluntary deduction, you can reduce your insurance premium below Rs 12,000 but it will still be higher than Rs 10,000. In case, there is an accident you will have to pay Rs 2,000 while your insurer pays the balance claim. Your saving in premium, which will be less than Rs 2000, will be more than offset by the amount you have to pay (Rs 2000) in case of an accident. If you are a very safe driver and the probability of having an accident is low, then you can opt for higher voluntary deductions to reduce your premium. Are you a safe driver or do you employ a safe driver? Very few, if any, would admit that they drive rashly. So you need to evaluate objectively. You should look at your “no claims bonus” history. If you have not claimed insurance for a few consecutive years, you may opt for higher voluntary deductions. But you should also be aware of the risk in case there is an accident.



• Do not let your policy lapse:

  If you let your policy lapse, you may not be eligible for no claims bonus that you would otherwise have been entitled to. At the time of buying your policy, make a note in your calendar or organizer when you policy expires and make sure you renew your policy before expiration. Also you should remember that, car or auto insurance is mandatory legal requirement. So you should not let your policy lapse.



• Compare premiums before purchasing:

  You should compare premiums from different insurers before purchasing car insurance. You can either compare the premiums online or get quotes from insurance agents. Also, you should remember that, a no frills policy is the cheapest policy. As the insurer adds features like roadside assistance to the policy, the premiums are likely to be higher. Some insurers also offer free life insurance cover as part of sales promotion. Be careful, when you buy such policies. The life insurance cover may be free only for a year and then you may have to pay premiums for the life insurance cover. You should read the policy fine-print very carefully, before purchasing the policy.

Conclusion

In addition to the above tips, insurers may also consider taking membership of organizations which promote road safety like, Automobile Association of India. Not only can you get number of benefits from such associations, but you can also get a discount on your automobile insurance. Also, if you have covered parking for your vehicle, you can be entitled to a discount on your insurance premium. You should check with your insurance agent. In this article, we have discussed a few tips that will help you reduce your car insurance. Above all, we should always remember to stay within speed limit, be alert and drive safely.