How To Keep Car Insurance Premiums Manageable

Having proper car insurance is crucial simply because it protects you from financial damage in case of an accident. There are a bunch of ways you can manage your motor insurance premium without compromising on coverage. Let us take a look.

Some Factors That Affect Car Insurance Premium

Factors like car model, condition, age, and geographical location impact the premium cost of your vehicle.” It is important to keep your track record of driving history clean, which tells the insurance company that you are a safe driver who does not violate traffic rules and, hence, there will be fewer chances of a claim, which results in a lower premium or discount in premium,” says Subhasish Mazumder, head, motor distribution, Bajaj Allianz General Insurance.

The car model also plays a significant role, as the cost of repairing luxury vehicles is usually high, and hence, their premiums often come at a higher cost. Geographical location decides the rates of traffic density, accident rates, etc., which may also affect the premium.

Other Options To Consider

“You can go for Pay As You Drive (PAYD) motor insurance plans, which allow you to buy insurance as per distance slabs - which means you pay for how much or the distance you drive. You can also ask for CIBIL discounts (wherever offered) while buying your motor insurance plan - you get a discount based on a good credit history,” says Paras Pasricha, head, motor insurance, Policybazaar.

Increasing the voluntary deductible can be considered, which means you'll pay a bit more out-of-pocket in case of a claim, but it can significantly reduce your premium. Preferred garages network is another way to manage your premiums.

“You can choose for a limited network of garages, you can go at the time of claims - which reduces your premium significantly. Few insurers also have plans where you can get a discount if you opt for a video inspection,” says Pasricha.

Set The Correct IDV

Insured Declared Value (IDV) is the sum insured or the maximum amount the insurance company will pay in case of total loss or theft of the vehicle.

The age of the vehicle is determined using a chart provided by the motor tariff. If the vehicle is older than five years, you and the insurance company mutually decide. The value also depends on the vehicle's current market value, considering factors such as make, model, age, and depreciation.

“Setting an appropriate IDV is crucial as it directly impacts the premium amount. Setting an unnecessarily higher IDV will result in a higher premium. Conversely, a lower IDV may lead to inadequate compensation in case of a claim,” says Mazumder.

Given the vehicle's current condition and market value, it is recommended to consult with your insurance provider or an insurance advisor to determine the appropriate IDV for your vehicle. “This will help ensure adequate coverage while avoiding unnecessarily high premiums.

It is always advisable to compare plans across multiple insurance companies to get the best rate for car insurance.