Are You Paying A High Car Insurance Premium?

Are you concerned that your car insurance premium is high? Take a look at the factors that determine your car insurance premium

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Your friend recently purchased a car insurance policy from the same car insurance company as yours, however her motor insurance premium was lower than yours. Are you wondering how that happened? Even if several parameters are identical, there are many factors your car insurance premium could be higher than your friend’s. Let’s take a look at some of the reasons that affect car insurance premium.

1) IDV Of Your Car

The Insured Declared Value (IDV) or simply, the market value, of your car is one of the factors that determines the car insurance premium. As time passes by, the IDV of your vehicle decreases. The IDV for old vehicles is lower than that of new cars. Therefore, the age of the car has a role to play in the calculation of the car insurance premium. In certain cases, the fuel type of the car also determines the motor insurance premium. Therefore, car insurance policyholders will pay different premiums for CNG, petrol and diesel cars. The age of the car also determines the premium paid by motor insurance policyholders. The premium for old vehicles is usually lower than that of a new car, with exceptions such as vintage cars.

2) Type Of Insurance Coverage Opted For

Comprehensive car insurance and third-party car insurance are two popular car insurance plans available in the market. While comprehensive car insurance coverage is provided to both the policyholder and third party, and for damages to their vehicles; third-party car insurance provides coverage to the third party, and personal accident coverage to the policyholder.

The premiums for both car insurance covers vary. Often, the premium for third-party car insurance is generally lower than that of comprehensive car insurance, however this may depend on several factors such as age of the car, model of the vehicle. Car insurance premiums are also calculated as per the various add-ons selected, which offer extra protection to the car insurance policyholder at an additional cost.

3) Types Of Add-Ons Purchased

Add-ons provide extra coverage to car insurance policyholders, however they come at an additional cost, which increases the motor insurance premium. There are several popular add-ons that car insurance policyholders can opt for.

No Claim Bonus Secure:

Protect your No Claim Bonus with the No Claim Bonus Secure add-on cover. With this add-on, you can get the benefits of your No Claim Bonus even after making a claim during the policy year.

Zero Dep:

The Zero Dep cover pays motor insurance policyholders for accidental damages without considering depreciation of various parts and paints. The zero depreciation prevents you from bearing depreciation up to 50 per cent on various parts and paints in the event of any damage to your vehicle due to an accident.

Engine Protector:

The motor insurance policyholder is paid for replacement and repair of engine damaged as a result of water ingression and leakage of lubricating oil

4) Discounts Offered

Memberships with bodies such as Automobile Association of India (AAI) and Western India Automobile Association (WIAA) can earn car insurance policyholders discounts. So, if your friend is a member of one of these organisations, she could be paying car insurance premium lower than you.

5) Deductibles Selected

Deductible is the amount fixed by the car insurance policyholder or the motor insurance company that needs to be paid towards the repair of the vehicle. It is an out-of-pocket expense. The higher the deductible the lower the car insurance premium.

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Tips to get the best car insurance

Apart from the above, here are some tips you can follow to ensure you get the best car insurance in India at an affordable price.

I. Choose only coverage that is needed

Assess the benefits offered by your car insurance policy. Opt for features that may not be of use to you. This will help you save a considerable amount of money on motor insurance premium.

II. Determine your deductibles carefully

If you have a low deductible, you will get a considerable amount when making a claim. However, you will also be paying a high motor insurance premium. You should opt for a low deductible only if you pay the motor insurance premium without any hassles. Also, if you consider yourself a good driver, which might reduce your chances of an accident indirectly, you could opt for a higher deductible.

III. Always renew your car insurance policy on time

Renew your motor insurance policy on time to get the benefits of No Claim Bonus. You can lose the NCB discounts that you have accrued over the years if you allow your car insurance policy to lapse.

IV. Avoid making small claims

Even if your car insurance will pay for repairs towards damaged vehicles, you should assess whether the motor insurance claim amount is bigger than the discount you will get on car insurance renewal as a result of No Claim Bonus (NCB) offered by your car insurance provider. Even a minor claim made on your car insurance policy can make you lose all the benefits of the No Claim Bonus, which is accumulated for not making car insurance claims over one or more policy years. NCB can help you get discounts between 20 per cent and 50 percent if no claims are made over one or more years. One can check the repair amount towards car damages with a local garage, and compare the discount accrued as a result of NCB. If it is significantly lower, then the motor insurance policyholder can avoid making the claim.


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Trade Logo displayed above belongs to Dewan Housing Finance Corporation Limited and used by DHFL General Insurance Limited with modification under license.
Coco (By DHFL General Insurance) is the Trademark used by DHFL General Insurance for its digital platform.