In India, motor insurance is compulsory for all the vehicles except bi-cycle . Insurance premium for this vehicle would increase when the value of the vehicle increases. Most of the owners feels that buying insurance is waste of money, the important factor in the motor insurance is the third party coverage which is protecting you from damaging others property. If you effectively manage your insurance every year, there is numerous ways to reduce the significant amount of the actual premium amount. This article explores few steps you can take to reduce the insurance premium. If you have any questions, please post it in the comments section.

If you are not familiar with the motor insurance, please read our earlier articles:

• What you should know about car insurance?
• How to finance buying a car?
• Mystery of Petrol Price Hike

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1. No Claim Bonus

This discount is known by most of us. If you are not claiming for a year, insurance company would offer you a certain percentage of premium amount as the discount. Most of the time this percentage is common for all the companies. This discount will increase each year till 50% discount. Most of the insurers offer 50% discount as the maximum allowed.

For example, if you met an accident and had expenses of Rs. 1500. This is a small expenses and there is no need to apply for insurance. If you apply insurance, your no claim bonus will be cancelled and it will be a loss for you. It is always recommended to file insurance only when the amount is huge. Another factor is the processing fees for claim, this would be common amount like Rs. 700 or more than that for any claim.

No claim bonus is for customer i.e. even if customer changes his vehicle, NCB can be transferred to the new vehicle. NCB will be terminated only when if a claim is made during the policy year or if the policy is not renewed within 90 days from date of expiry on your existing policy.

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2. Automobile membership

If you have the membership in the automobile association, you will get the discount. This discount will be for the own damage claim. It is allowed only for the two wheeler and car. The discount will be 5% for own damage, Rs. 200 if it is a car and Rs. 50 if it is a two wheeler.

3. Special equipments in your vehicle

Few vehicles have the special equipments which can protect the vehicle from theft and some other damages. This equipment has to be certified with the Automobile Research Association of India.  If your vehicle has that feature, you may get the additional discount of 2.5% or more from the insurer.

4. Third party coverage limit

There is a limit for the third party claim coverage. It has the two option, one is Rs. 6000 and another is Rs. 75000. The premium difference is just Rs. 100 for the two options. So, it is better you get the Rs. 75000 option to protect for more damage instead of just Rs. 6000. With this, you can protect more coverage in less premium.

5. Physically challenged

If you are physically challenged person, then you have the option of getting 50% discount on the premium. For that you have to submit the medical proof. Note that, this points you have to mention if you are buying the insurance through online. There is more chance that you will not mention these points if you buy through online, in that case get the appoint from insurer and avail the discount.

6. Compere different insurers

This is one of the great task to reduce the insurance premium. There are many website in internet offers the comparison of the insurance cost for your vehicle. You can get the quotation from different companies and choose the best price. Note that cheap price is not always the best one. It depends on your usage and how many times you claim the amount. Some companies have the poor claim payment record, you have to be careful if choose them as your insurer.

If you are not familiar with the motor insurance, please read our earlier articles:

• What you should know about car insurance?
• How to finance buying a car?
• Mystery of Petrol Price Hike

I hope the above points would be little helpful for you to save the insurance premium. Most of you may be aware of all the above points, but this will act as a remainder for your knowledge. Insurance premiums for cars are getting increased because of the high inflation in India, it had a steep increase in the last two years. So, this become important for every one to save the maximum cost in paying the premium. If you have any questions, please post it in the comments section.

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If you are planning to buy a Car, it is worth paying attention on carious clauses on insuring your own vehicle. There are various factors like Insured’s Declared Value(IDV) and No Claim Bonus (NCB) will add or reduce the cost of your insurance. It is advisable to know the facts before you buy an insurance. This article intends to give you basic idea on what are the various factors you have to consider while buying the Car insurance. If you have any doubts, please post it in the comments section. If you like the article, subscribe to our future articles here.

Basics of Car Insurance

There are two types of policy:

• Liability only policy
  • A Liability only policy covers bodily injury or death of a third party, damage to third party’s vehicle and life of the driver.
• Package Policy
  • Under the package policy, you will get the cover for insured vehicle with third party liability cover.

1. When you buy a Car, the dealer would have tie up with many of the insurance companies, you can buy the insurance with them. Also, you can buy the Car insurance online too. But, there won’t be any discount while buying online.
2. The cover for the third party and accident is fixed by the India Motor Tariff committee. It is Rs.7.5 lac for damage of third party vehicle and Rs.2 lac for the life of owner or driver. The cover for the third party’s life or his bodily injury is unlimited. The amount is decided by the court will be paid by insurer.

Premium for Car Insurance

Car insurance premiums are calculated on considering the following four factors:

1. Insured Declared Value (IDV)
   • The IDV is determined by the age, model and brand of your vehicle. IDV value will be decreased for each year. It is the value of the amount that is paid to you in case of theft or Complete damage of the vehicle.
2. The city of registration
   • The insurance  charges may vary based on the geographical locations .
3. Cubic capacity
   • Another fact is that premium is calculated based on the cubic capacity of the vehicle. No other features will be considered while calculating the Premium.
4. Claim history
   • Last factor is that claims history; it affects the amount of premiums you will have to pay for the insurer. If you have the less number of claims or no claims at all for many years, Your premium will be very low.

Discounts on Premium

Insurers discount your Car insurance premium on considering the various factors. Apart from that there is some insurance laws allows deductions on the premium payment. The following are few facts to remember while paying the premium amount:

• The Indian Motor Tariff says that insurers should offer discount if the insured is a member of recognized automobile associations.
• Also discount allowed if the vehicle is installed the anti-theft device.
• Cars owned by handicapped also get discounts.
• If you agree to share the some portion of the damage, insurer will offer you some discount. Higher the amount you are willing to share, the discount amount will be increased.
• No Claim Bonus (NCB) is another discount offered on Car insurance for driving safely. It is 20% for driving safely for the whole year. It will be increased to 50% if you don’t claim for the five consecutive years.
• Discount is calculated based on the IDV value of the car. Make sure that insurer is not modifying the value of IDV.

Renewal of Insurance Policy

Car insurance policies has to be renewed on time. The following are the consequences of not renewing the insurance before the expiration date:

• Car insurance has to be renewed before the expiration data. Failing to renew the policy is against the law and will lead to penalties if found by the Traffic police.
• If you met any accident while driving the car with expired policy dates, you will not be eligible to claim the damages.
• If you are not renewing the policy within 90 days of its expiry, you will not be eligible to claim the no claim bonus (NCB).
• Insurance company would suggest the vehicle inspection in the case of failing to renew the insurance policy on time.

Additional /Optional Features on Car Insurance

There are number of additional features available in the car insurance with extra cost. It is necessary for every one to take the Liability policy. Apart from that depends on policy holders capacity he can insure additional accessories in the vehicle. The following are the few options:

• If your vehicle has the additional feature of LPG kit, it has to be insured separately with additional premium of 4% of the kit.This has to be declared in the Insurance proposal form.
• Personal injury protection: This covers you and any passengers in your car against any harm at the time of an accident. If you want to get coverage for a driver then that is another feature.
• Uninsured/Under insured coverage: This covers any expense if you are hit by someone whose vehicle is either not insured or under insured.
• Collision: This covers repairs to your car in case of an accident by another vehicle, or object. It will take care of expenses on the repair of your vehicle excluding the voluntary amount that you want to pay on your own.
• Car accessories: You can have an additional cover against damage to your car accessories like music system and air conditioner.

No Claim Bonus (NCB)

NCB is offered as the reward for driver to safely drive the vehicle. There are few constraints and rules related to the percentage of NCB offered.

• NCB starts with 20% and goes up to 50%
• NCB will not be given if there is any claim in the previous year
• NCB has to be claimed within 90 days from the date of expiration.
• NCB can be utilized within 3 years (where the existing vehicle is sold and a new
  car is purchased)
• NCB gets transferred to the legal heir in case of Death of customer
• NCB earned abroad can be given in India

Summary

It is important to remember the above points while purchasing the car insurance. Our country has the plenty of insurers to offer the car insurance for very cheap price. If you have the good understanding on topic, it would be easy for you to bargain the car insurance for very low price. I hope this article would have given the basic ideas to calculate the premium amount on car insurance and various aspects related to the car insurance. If you have any doubts, please post it in the comments section.

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