Understand These Motor Insurance Trade-Offs Before Going for Low Premium Policy
With the soaring car prices in India, the motor insurance premiums have witnessed an exponential growth, leading to dissatisfaction among most of the car owners. In India, availing a car insurance policy is a mandatory requisite before taking down the cars on road. This not only ensures monetary security but also provides umpteenth coverage during car theft or accidental damage of any kind. However, in order to avail advanced benefits and potential coverage, the policyholders mostly have to opt for an expensive motor insurance policy which is downright unaffordable. On top of this, the constant changes and unexpected hikes have made things quite difficult for the people in general. For instance, in 2017, the approval of up to 40% hike in third party insurance had resulted in a huge uproar. To avoid being a prey to such discrepancies, the policyholders are always on the lookout for lower premiums policies.
Types and Ways Of Lowering The Motor Insurance Premium
No Claim Bonus is one of the most important factors in car insurance policies. It is a certain percentage of bonus or deduction allowed to the policyholder if he/she does not make any claims for a period of three to five years. The discounts offered may vary up to 50% and depends on the period of not claiming the policies. Some insurance companies also provide NCB after a period of one year of no policy claiming. However, the benefit of NCB can only be exercised at the time of policy renewal.
To be eligible for NCB in long term, the policyholders are required to have a strategic approach towards policy claiming. One should avoid claiming the policy benefits in case of small expenses such as for repairing petty damages, dents or other faults in the machinery that do not incur a jaw-dropping expense. This helps in bonus accumulation and results in a major discount at the time of policy renewal.
- Importance of No Claim Bonus or NCB
Voluntary deductibles are the amount decided by the insured individual, which he/she has to bear from his own pocket. The deductible amount is decided at the time of policy buying and during renewal of the policy. To understand this better, let us cite an example. If a policyholder avails a motor insurance policy of 25000 INR and decides on a voluntary deductible of 15000 INR, the premium that should be paid at the end of the year will get reduced considerably. At the time of policy claiming for repairing any damage or other listed reasons that costs around 25000 INR, the insured will have to bear 15000 INR from his own pocket, and the insuring company will pay the remaining 10000 INR. Hence, higher the voluntary deductible listed at the beginning, lower will be the motor insurance premium payable annually. However, one should only list the amount for voluntary deductible, as much as he/she can afford during emergency situations.
- Voluntary Deductibles
Premium lapse is a serious issue which can cause considerable loss to the policy bearer. It means, if the insured individual fails to submit timely premiums, he/she shall not be eligible for further bonus and discounts in the future. It also means that the policyholder may not receive the No Claim Bonus, even though he/she has not made any claim in the past years. This can also happen, if the policyholder fails to renew their policy before expiration. Generally, the insuring company gives a certain period of relaxation (usually a few days) after the expiration of the policy. However, the policyholders are expected to make timely payments and renew BEFORE the expiration of the motor insurance policy.
- Prevention of Premium Lapse
Membership of Automobile Association of India provides additional discounts and benefits to the policyholders while claiming the car insurance policy. The membership is solely provided to the individuals who pass the Safe Drive tests and are eligible as per other criteria and are believed to be responsible on-road drivers. Apart from this, the members of the Western India Automobile Association or WIAA are also eligible for such discounts that are downright helpful in lowering motor insurance premiums.
- Avail AAI membership
Before buying a motor vehicle insurance, every car owner should compare the policy premiums, risks attached, and the extent of damage coverage offered. With increasing competition on the insurance market, several companies have come up with flattering offers which are hard to resist. One should thoroughly check the motor insurance online websites to know more about the amount of discounts and the benefits offered, and thus choose a cheaper premium policy.
- Quote from multiple motor insurance companies
Lower premiums are always affordable and are potentially economical for the majority of policyholders. However, these come at a definite cost. The policyholder should agree with the return value of the motor insurance premium as lower premiums may lead to lesser coverage and more cost to bear during the damage.