Behavioural biases that damage your investments!
In matters of investment, the sooner you acknowledge your mistakes, the sooner you'll find help in getting out of the soup. To break free from biases, the first step should be to identify those biases, says, Balwant Jain, Tax and Investment Expert.
Owning a car and running it is becoming more and more expensive with fuel prices moving up week after week. Petrol has touched Rs 100 a litre in some places and is hovering around the century mark in many others. You have no control over the prices of fuel. However, if you are smart you can save on your car insurance premium at the time of renewal.
The third-party insurance for a vehicle is mandatory in India. However, the other part of the policy, that is, the Own Damage (OD), is optional. However, if one wants to insure one’s vehicle, one normally buys a comprehensive motor insurance cover which includes both. In a third-party insurance cover the premium rates are fixed as per the vehicles engine capacity and in the OD cover the premium rates largely vary as per the cover one opts to protect their vehicle. It can include the make, model and multiple add-ons associated with the policy. So, if one knows which factors can increase the premium of the policy, one can easily bring down the premium outgo without compromising on the coverage.
Here are some ways an individual can reduce car insurance premium:
Opt for voluntary deductibles
If you opt for voluntary deductible, you can reduce your insurance premium because you need to contribute a predetermined amount to the total claim amount. This in turn helps the insurer to pay less while settling a claim and therefore, they charge a lower premium.
For instance, if there is a claim of Rs 8000, and you opted for a voluntary deductible of Rs 2,000 then you need to pay Rs 2,000 from your pocket (excluding the compulsory deductible as per guidelines of the Insurance Regulatory and Development Authority of India – IRDAI) and the rest is paid by the insurer. So, if you think your driving skills are good, or you don’t drive too much then you can get a voluntary deductible while buying an insurance policy.
Try to get No-Claim Bonus (NCB)
If you haven’t made any claim in previous years, the insurance companies give a discount on the premium at the time of motor insurance renewal. This also helps in reducing your insurance premium. So, when you think of making a claim during the year, you must consider the NCB factor before deciding whether or not to claim because once you make a claim, you don’t get any discount in the next renewal.
Minimise add-ons or riders
Although add-ons offer extra security, they come at an additional cost. These can include add-ons like zero depreciation, engine cover, co-passenger cover, etc. You must not buy all add-ons on offer with your policy as it unnecessarily increases the premium amount, and go for only those add-ons that you think are relevant as per the location or your place of residence.
Install anti-theft device
Generally, securing vehicles with an anti-theft device that is certified by the Automotive Research Association of India (ARAI) might also help you get a discount on car insurance premium. If the device is installed in your vehicle, then you can negotiate premium rates with your insurer.
Depreciation and Insured Declared Value (IDV)
Insured Declared Value (IDV), which is arrived at after applying depreciation on your vehicle, is the sum that the insurer will pay the insured to replace the car. The premium will be lower in case of lower IDV. Hence if one seeks a higher IDV it will increase the premium rate while there may not be any tangible benefit to the insured.