Bought a car this Diwali? Now, here’s how to bring down your insurance costs

Driving safe? Choose ‘Pay how you drive’ add-on

Until recently, there was no mechanism to reward good driving, except for the no-claim bonus or NCB.

However, IRDAI recently launched the ‘pay-how-you-drive’ model that tracks the driving habits and profile, and rewards them with a discount on premium for good driving. So, someone who follows rules and drives carefully can choose to pay a lower premium than someone who violates the rules or crosses the speed limit. This is a great add-on, not just for the discount, but also for maintaining road safety.

Own multiple cars? Go for a family-floater policy

There’s no dearth of families in India where members own individual cars. However, that doesn’t mean that they are all being used at the same time. Often, people reserve a bigger SUV for long-distance trips and use smaller cars for day-to-day needs. In such a case, you don’t need to pay the standard premium round the year for all the cars.

You can opt for a family floater plan where all your vehicles will be insured under one single umbrella plan and the premium will come down automatically.

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Consider the deductible

In the context of motor insurance, deductibles ― also referred to as voluntary deductions ― are the out-of-pocket costs that the insured agrees to bear at the time of claim. The deductible needs to be chosen carefully and as per your risk profile.

For instance, if you keep the deductible as nil, you will receive the entire claim amount without having to pay anything out of pocket, but will have to pay a higher premium.

On the other hand, if you are a confident driver who is less likely to make a claim, you can choose a higher deductible and save on premium. However, you need to note that there’s a Rs 1,00 compulsory deductible applicable, even if you select the voluntary deductible as nil.

Make the most of the No-Claim Bonus

As mentioned earlier, no-claim bonus is the most popular way of cutting down on premium cost. This is a bonus that an insurance firm provides to the policyholder for taking good care of the car and not making a claim during the year.

This means for each claim-free year, the insured will save money by receiving either attractive discounts or having to pay lower premiums on purchase or renewal of insurance. For instance, as per regulations, you are eligible for up to a 20 percent reduction in the first year, a 25 percent discount after two years, a 35 percent discount after three years, and a 45 percent discount after four years if no claims are made.

This bonus, however, stands null and void even if you make even a minor claim or don't renew your insurance within three months of the policy's expiration date. Hence, it is advised against filing a claim for minor damages and instead paying for them yourself.

Likewise, when buying a new automobile by trading in an old one, remember to transfer your no-claim bonus. You can also opt for no-claim bonus cover to keep it intact, even if you make a claim.

Besides the above tips, for a bit more savings, it’s best to compare the various policies and features online before making a purchase decision. Also, read the fine-print and comprehend any hidden expenses before choosing your preferred policy.