Do you own cars and have insurance policies but the high insurance premiums yearly hurting your budget? Here are smart and easy ways to pay less for adequate coverage without compromising on protection needs. You can use these smart way to reduce your premium cost smartly.
Assess Needs, Buy Customised Covers
Insurance providers offer many tempting add-on covers for extra fees which may not benefit everyone. Evaluate if you really need them before paying more.
Additional covers for zero depreciation, personal accident protection, engine protector etc prove useful only based on individual risk appetites.
Avoid bundles or unnecessary covers that don’t match your driving habits. Stick to basic legally mandatory third party covers or optimally enhanced comprehensive policies that suit your actual usage.
Increase Voluntary Deductibles
Deductibles refer to the part of costs you pay out of pocket during insurance claims before the insurer steps in to pay the larger bills as per policy limits.
Opting for higher deductible amounts voluntarily like Rs 20,000 or 50,000 instead of standard levels of Rs 5,000 or 10,000 effectively lowers the overall premium you pay.
This is because you share more of the smaller charges when needed while insurance protects from major complex charges. Useful tactic for those confident of paying small charges comfortably when required.
Accumulate No Claim Bonuses
Not claiming against insurance policies over successive claim-free years earns incremental No Claim Bonuses (NCBs) which cuts renewal premiums substantially by 50-65% over 5 years.
However, even a single major claim approval erodes these discounts built up painstakingly over years. Having adequate covers hence shields NCB retention so these savings can continue accumulating allowing lower payouts as veteran owners.
Some add-on covers also explicitly protect NCB retention despite approval of claims, a useful value addition.
Modify Insured Elements
Car owners can potentially reduce premium outlays by tactically removing certain non-essential covers, For example, disability cover and hospitalisation cover for young drivers given lower health risks, third party liability cover for cars parked safely in garages most of the time etc.
But don’t compromise on legally mandatory aspects like basic third party damage. Customizing protection layers to specific needs often lowers costs without really losing actual protection.
Alter Liability Limits
Car owners can also lower overall premiums by reducing the insured limits under own-damage covers or third-party liability covers after evaluating asset costs, replacement values and risk appetites prudently.
For older cars nearing 10 years of age, reducing third-party liability limits makes sense when contemplating selling off the car after a couple of years when insurance policies expire along with registration.
Timely modifying liability limits aligned to needs upon renewals often throws up cost savings without losing adequate protection.
Evaluate and Switch Insurers
With so many insurance providers in the market, car owners should compare premium rates across companies and actively consider porting policies during renewals to insurers offering the lowest costs for similar policy benefits.
Reliable insurers like National Insurance, Reliance General, TATA AIG General Insurance etc have robust processes for smoothly servicing claims if the need arises.
But don’t get lured by dubious insurers offering extremely low premiums through glossy promotions, poor service often outweighs upfront savings.
Select Optimal Policy Tenures
Car insurers provide policy tenures ranging from 1 year to up to 3 years for new cars and 2 years for renewed cars. Opting for longer tenure policies of 2 years for cars and 3 years for two-wheelers works out 5-15% cheaper on overall costs than buying single-year contracts.
However, long tenures also lock customers in for the policy period restricting flexibility. One has to balance tenure discounts against retaining future options to switch insurers when better deals come by.
Renew Policies at Opportune Times
Existing customers seeking renewal can also save 10-15% by timing policy purchases prudently. Renew policies just 2-3 weeks before expiry to enjoy significantly lower premium charges versus delaying renewal by a few months after expiry when insurers levy higher rates.
Similarly, buy new insurance policies during months like February-April when overall customer demand drops rather than in December which sees peaks in purchases. The cost difference across such demand troughs and peaks can be noteworthy.
Prefer Annual Premiums
Car insurance providers often levy heavy processing and service charges when policy buyers opt for half-yearly or quarterly premium payment instalments.
Paying the entire premium upfront annually avoids most such fees. Hence, prefer 1 or maximum 2 instalments annually over 6-month premiums to enjoy 5-10% lower overall payouts through discounts.
Of course, this requires disciplined budgeting to be able to allocate funds for once-a-year outlays.
Buy Online, But Wisely
With insurers focusing heavily on direct online retail channels today, buying car insurance policies directly from insurer websites rather than via agents offers 10-15% discounts relatively.
Insurers pass on savings from much lower operating costs and overheads to customers. However, the flip side is that customers lose out on agent assistance for facilitating procedures or advising on optimal covers. Hence utilize online channels cautiously after doing your homework.
Explore Special Deals
Many prominent insurers today offer exclusive membership programs at nominal fees which allow members to buy tailored policies at 5-7% lower premiums relative to non-members.
Similarly, several banks, credit cards, professional associations, alumni networks, corporate tie-ups etc enable special discounted group insurance deals for affiliated customers.
Actively check and avail such offers if you have access to any relevant memberships or programs.
Boost Credit Scores
Insurers evaluate credit scores of previous insurance buyers from credit rating agencies to categorize customers into risk profiles and offer differential pricing.
Customers with excellent credit scores get much better premium rates reflecting financial discipline. Enhancing creditworthiness over years through prudent financial behaviour makes one eligible for superior risk categories and hence, lower costs.
Conclusion
Above comprehensive set of tips if followed prudently can helps you to optimize insurance costs substantially without compromising on getting sufficient protection covers. Do assess your needs and employ these tricks responsibly to stay financially safe on roads at wallet-friendly rates. Paying less for covers that secure your assets and interests is surely a smart way forward.