Motor Insurance becomes more expensive: What is my actionable?

With rising inflation, increase in number of claims made and loss ratios of insurers, IRDA has enforceda hike in third party Motor insurance. Effective from April 1, 2017.The third party Motor insurance premium rates are increased up to 40 percent. For Small cars with engine capacity of 1000 cc to 1500 cc the applicable rates are 2237. While cars exceeding 1500 cc applicable rate is 6164. For two wheeler category, the hike is from 16 to 40 percent depending on the engine capacity. This hike in motor insurance implies that if you are buying a new car or an old car, you need to pay an extra premium. As third party insurance is mandatory by Motor authority of India so one cannot escape buying it. But still you can save on premium with the following actionable.

Buying a standalone third party insurance:

If you want to save even a little on the premium you can opt for the standalone third party insurance that covers any damage to property, injury or death of the third party due to any unfortunate event like accident. Although it is advisable to purchase a comprehensive motor insurance that covers the insured, vehicle and third party in a single policy and all the risks covered in the Motor Vehicles Act plus loss or damage caused to the vehicle due to uncertainties as per inclusions. But it may cost you high on premium. So if you are a safe driver and use the car sparingly, use can opt of standalone third party insurance.

Opting for a voluntary deductible

Voluntary deductible is the amount of claim you want to willingly pay and the insurance company pays the balance amount .Thus here you agree to share the cost of repair during claim .Opting for a voluntary deductible lowers the premium amount for your insurance plan. Here in you can opt for the amount of deductibles you want to pay .If you are a safe driver and have small car, your average cost of repair might be low,so you can opt for a lower deductible and vice versa.

NCB : Non claim bonus is the bonus accumulated for every consecutive  claim free year over the insurance policy tenure .NCB can lower the premium for up to 50%. So, if the current claim is lower then what you can save as premium with NCB .It’s better to pay with your own pocket rather than getting a claim and loosing on NCB and lowering the premium amount.

Bundled car insurance:
You can also save on premium by bundle the insurance plans of all cars in your household. The insurance provider can offer you a good discounted premium if you opt to buy the motor insurance from the same insurance company.

Buy a multi year insurance policy for your two-wheelers:

Recently Insurance providers have started to offer Multiyear motor insurance. These policies are cheaper than annual-renewal plans also Insurers give discounts ranging from 2%-6% on own-damage insurance for such plans. Also multi-year motor policies will be exempt from Insurance Regulatory and Development Authority of India’s (IRDAI) annual premium hikes,which safeguard for the future hike in premium rates by IRDA for at least 3 years. Some of the companies which offer Multiyear insurance policy are ICICI Lombard, New India, HDFC Ergo, Bajaj Allianz General, etc.

Excluding the frill and installing safety features:

If your car has safety features/anti-theft devices like locks for the steering wheel and gear, anti-theft alarms then you can save on premium up to 5%. Thumb rule is,more safe is your vehicle lesser is the premium. Also adding extra modifications and expensive gadgets like adding alloy wheels, spoilers, automotive night vision, ultrasonic sensors, etc. may lead to a higher premium .So one should avoid all this extra modifications to avail lower premium

Think twice and compare before buying

Usually when you buy a new car from the dealer, the dealers offers you to purchase the car insurance from its alliance companies/banks but it may not be the cheapest option .You should check online and compare quotes from other insurance providers and banks, also the bank through which you are taking the loan for the purchase of car might offer you better and discounted options. Lastly Compare all the features and buy accordingly. You should also remember that you may get better offer, discounts and loyalty benefits if you have multiple policies from the same providers. Also, if you are buying the insurance policy from the same provider from several years, then you should look for better options available in the market.

Bottom Line

Lastly, motor insurance is equally important as buying a car itself, it should be well thought of and bought accordingly. Though Third party insurance is statutory and hike up to 40% might burnout pocket but it gives you peace of mind and a protection against the unforeseen circumstances .You can buy either a standalone third party insurance or a comprehensive cover,also by following the actionable mentioned above you can save a little on the premium you pay on the own-damage cover.