Sunday, March 3, 2013

Motor Insurance In India Reducing Premium

It's a well-known fact that as per the Motor Vehicles Act in India all the vehicles plying in any public space need to have an insurance policy at least to cover third party liability. Since this is the most basic kind of cover and costs less too, car owners normally opt for an insurance that covers third party liability. Many consider the premium for a comprehensive policy to be way too expensive; but what they fail to realize is that paying for the repair of any damage to their car will be all the more expensive.

If you are a car owner with the same belief, then you must know that there are ways by which you can reduce the premium of your motor insurance plan and enjoy a comprehensive cover.

Here's how you can reduce the premium cost of your motor insurance in India –

Voluntary deductible – By agreeing to pay a part of the monetary loss you can reduce the premium amount of the policy. Every car insurance plan has two deductible components, compulsory and voluntary. Under the compulsory component there is a certain amount that you need to pay when you raise a claim; while the company pays the rest. By availing an additional voluntary deductible rider you can lower the premium amount. However, sometimes this may also prove a little expensive for you in case of a bigger damage. This option is ideal for those who are confident about their driving.

Insured declared value(IDV)– This happens to be the market value of your car. While calculating the premium of your car, the IDV is largely taken into consideration. So higher the value of your car the more will be the premium. By declaring a low IDV you can reduce the premium by a few hundred rupees. For e.g. if your car is worth 6 lacks then declare only 5.3 lacks. This will save you close to 200-300 on the premium.

Safety device – While insuring your car the company also runs a risk of covering theft of the vehicle. If you assure the company that you've done your best to keep your car safe, you can save a hundred or two on the premium. Do this by installing good safety devices in your car. Also, you can do this by joining the Automobile Association of India, this will improve you image before the insurance companies and save you an additional 200.

No claim bonus – If you avoid making small claims for any damage to your car, you can save a good 20-50% on the premium. No claim bonus is the provider's way of rewarding the policy holder for not raising a single claim in the given year. This starts showing results from the second year of your policy. A major benefit of this facility is that it can be transferred from an old vehicle to a new one as it is accumulated on the name of the driver and not the vehicle. This is mostly what car owners do to reduce their premium on motor insurance in India. Let's take a look at what car owners abroad do to slash their auto insurance premium.

Ask for discounts – This looks like a practice that Indian car owners should adopt too. Given the variety and tough competition in the market, every insurance provider offers a different price to attract customers. In fact abroad many companies offer reduced rates to owners who are above 50 or 55 years of age. So there is no harm in asking the insurance provider if they have any such special privileges in store. It can save you a good amount rather than blindly paying the premium quoted by the provider.

Clean credit score – Abroad, the credit rating of a car owner plays a major role in deciding the premium amount for auto insurance. A good credit score equals to lower premium. It shows the company that you are a responsible at making payments and the risk of covering your car is low. It will be good for the Indian car owners to get into this practice as well, because soon this aspect may be a criterion here as well. So pay up your credit card, utility and other bills on time to build a clean record.

Reduce the miles you travel – Car insurance providers overseas also look at the miles the car is driven before calculating the premium. So the fewer miles a car covers, the lesser is the premium amount. Several insurance providers there offer pay-by-the-mile programs that drastically cuts down the premium amount as a regular plan would charge. Indian car insurance providers are soon to include this aspect in the premium calculation factors as well. The main reason behind this is that the traveling less kilometers means lower risk to the car.

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