Tips to reduce the cost of your motor insurance policy

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Several factors determine the cost of a motor insurance policy ranging from the make and model of the car, its engine capacity to the type of cover you opted for. While some may find these rates competitive, others may feel the pinch in their pockets. One of the most common practices for lowering premium rates is by lowering the Insured Declared Value or IDV. But experts say this is not the right way as it would impact your claim amount, especially at the time of total loss.

Here are a few tips to reduce your motor insurance premium rates:

Make full use of NCB

If the claim amount is very small then in some cases it might not be advisable to make a claim, as you would lose out on your No Claim Bonus or NCB. So before making a claim do weigh the claim amount against the NCB due next year at the time of renewal.

For every claim-free year, you get a discount on own-damage premium known as NCB. The discount rate increases until it reaches a maximum limit of 50%. For example in the first year you get a discount of 20%, the second year it will be 25%, the third year 35%, the fourth year 45% and fifth year it reaches 50%.

‘Pay As You Drive’ policies

These policies are for people who do not travel frequently, especially those who work from home or have their house and office nearby. The feature can be used effectively to earn discounts as high as 30% as it also keeps track of the driver’s driving skills. The premium rate for usage-based car insurance depends on the distance travelled by the insured car.

Discount on anti-theft device

Insurance companies offer discounts if you have anti-theft devices installed in the car including GPS system, safety lock for gears, among other things. At the time of filling the proposal form, you need to inform your insurance company about such installations. Moreover, these anti-theft instruments must be endorsed by the Automotive Research Association of India.

Increasing deductible

You can also increase the deductible amount also known as voluntary excess for reducing the cost of your policy. But remember that you will be needed to pay the deductible amount out of your pocket at the time of making a claim.

Don’t let your policy lapse

If your policy gets lapsed, you could lose out on the NCB discount you have collected so far. Therefore, it is always advisable to renew your policy on time, as you will lose the NCB benefit if you miss the premium payment date.

Choose add-ons wisely

With every add-on, you are charged some extra premium. Therefore, while selecting add-ons make sure you choose the covers wisely else you might end up paying a higher premium for the coverage which is not even needed.