Tips to reduce Motor Insurance Cost

By SiliconIndia   |   Wednesday, September 26, 2018
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Vehicle or motor insurance, as the term indicates, is an insurance policy that protects a vehicle owner against financial losses that arise because of accidents, damage to the vehicle and even theft of the motor vehicle. Yes, it is mandatory in India, but this should not be the cause for concern if you are thinking about the costs associated with the same. Think of motor insurance as an investment rather than a cost.

There are plenty of options out there when it comes to insurance, and here are a few tips that you can keep in mind when it comes to reducing the costs associated with motor insurance.

Tips to reduce Motor Insurance Cost

Knowledge is Key

Research is important when it comes to selecting an insurance provider. The market for motor insurance in India is huge and is populated by a large number of players. According to The Statistics Portal, the value of motor vehicle insurance in India was around $5.59 billion a few years ago. This figure is projected to touch $17.4 billion in the year 2025. This simply means that you have an immense landscape to research for the best option possible.

Some of the factors that you should look for are:

  • Longevity of the company
  • Customer reviews for the company and its products
  • The portfolio of policies that they offer and
  • Add-on benefits such as zero depreciation cover, no claim bonus cover and emergency services.

The website of a company is a great place to start, but do branch out into social media and online review websites as well, to get an unbiased and wider insight into an insurance company. It is also good to check if the vehicle insurance company is recognized by or registered with the Insurance Regulatory and Development Authority (IRDA) or not.

Type of Policy

Broadly speaking, there are two kinds of motor insurance policies:

  • Comprehensive insurance
  • Third Party Insurance

The former has a higher premium but offers more benefits such as coverage due to natural or man-made disasters, zero depreciation cover, personal accident cover and legal liability to a third party and so on. Third party insurance cover, on the other hand, comes with the benefit of lower premiums but is limited in its scope. It covers accidental death that may be caused by the policyholder and looks after property damage as well.

Getting into the details of each kind of policy and the elements it covers is essentialfor finding out what you would like to pay. For instance, if the locality you live in is rife with vehicle theft, then comprehensive insurance is essential.

Policy comparisons

Again, this is easier than ever before because there are a large number of websites that allow you to compare different insurance companies and the policies they offer. As a smart approach, it is ideal to check out the exclusions in a policy when you make your comparative study.

For example, IFFCO-Tokio is one company that has zero-dep policies for vehicles that are 7 years old. This helps if you are driving an old vehicle!

What drives your vehicle?

The engine of course and it has a bearing on the costs of insurance. There are three categories here:

  • Below 1000 cc engines
  • Between 1000 cc and 1500 cc engines and
  • Above 1500 cc engines

This factor is also important if you are looking for commercial vehicle insurance. Insurance for commercial cars is significantly greater than insurance for private cars and vehicles. Along with the engine capacity, other factors that can inflate the premium are:

  • Vehicles that run on CNG
  • Dimensions of the vehicle
  • Age of the vehicle which will also determine the IDV or Insured Declared Value

The IDV is the highest possible amount that you can claim when you are claiming insurance. The IDV and the age of the car are inversely proportional – IDV decreases when age increases.

Drive safely

This adage applies even to ‘non-insurance’ related scenarios of course but it is true that your driving record has a huge bearing on the costs of insurance. You can also install safety devices in your vehicle in order to bring down the cost of insurance even more. Some of the things that you can add to your car are anti-theft devices, GPS and car lock mechanisms. Driving safely will also help you claim an NCB or No Claim Bonus – simply because you have not had any accidents.

Apart from your driving record, you can also make some wise choices when it comes to choosing a new car. For instance, imported cars are more expensive to cover than Indian cars. Sports cars are considered more at risk and therefore are more expensive to insure. Interestingly enough, the track record of a particular make and model of vehicle can also impact the insurance value. So, while shopping for a car, find out about its safety track record too.

Go digital

Getting online vehicle insurance is a simple and effective way in which you can reduce vehicle insurance costs. Most online insurance plans are significantly lower than offline plans – in some cases even up to 60% lower. It is also easier to delve into detailed information while buying insurance online. You could also enjoy the added benefit of a higher sum assured when you buy online.

At the end of the day, it takes just a few simple tips to help you save money on an essential investment such as motor insurance.

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