Many car insurance policies encourage good driving habits by reducing the cost of vehicles that are not driven often enough. Car sales in India finally saw a boost during the festival season after the slowdown of the pandemic and the resulting supply chain issues.
Buyers are benefiting from the post-pandemic recovery reflected in cars for sale nationwide. Nearly 2.1 million units (20,94,378 units) across five vehicle segments — two- and three-wheelers, passenger cars, passenger cars, tractors and trucks — were sold this October, according to FADA research.
In addition to discounts and special offers, there’s a third area that can increase your savings: your car insurance costs. Car insurance is a legal requirement in India and is essential for driving safety. When people look for ways to reduce fuel costs as well as the cost of showing a car, they often don’t consider the premium price.
Do you drive less? Opt for the “Pay as you drive” insurance.
Technology-enabled Pay as You Drive (PAYD) is an innovative concept introduced months ago by the Indian Insurance Regulatory and Development Agency (IRDAI) as a regulatory sandbox policy. This PAYD car insurance is a usage-based model. Mandatory liability insurance is issued to the buyer, but the personal injury portion depends on how the vehicle is used. More recently, the model has been cleared by the regulator as an additional option to help customers save money on premiums. With a tracking device or a mobile app, it is possible to measure the distance traveled in kilometers and use this to calculate the price. Additionally, insurance companies can offer policies that allow you to turn off your insurance days if you don’t plan to drive your car. This is ideal for those working in an automated setup or hybrid vehicle, or anyone who doesn’t drive frequently and chooses to use public transport or taxis.
Are you driving safely? Select the Pay for Your Ride add-on.
Up until now, there has been no system for rewarding best driving performance other than the No Claim Bonus (NCB). IRDAI recently introduced the pay-as-you-drive model, which tracks drivers’ driving patterns and profiles and rewards drivers with discounts on safe driving awards. So, if you follow the guidelines and drive carefully, you could pay less than someone who breaks the rules or exceeds the speed limit. This is an excellent benefit, not only for getting a discount, but also for maintaining traffic safety.
Do you have multiple vehicles? Consider family floater insurance
There is no shortage of households in India with members who have their cars. But that doesn’t mean that they are all used equally. Most people choose a larger vehicle for traveling long distances and prefer smaller vehicles for everyday needs. In this scenario, the costs do not have to be paid for each car throughout the year. You can choose a family floater plan where all your vehicles are covered under one umbrella plan and the costs will come down on their own.
In auto insurance, deductibles are often referred to as voluntary deductions, the out-of-pocket costs that the insured has assumed at the time of claiming. The deductible should be chosen carefully and suit your risk profile.
If you leave the deductible at zero in the event of a claim, you can receive the full amount without paying any expenses, but you will have to pay a higher premium. However, if you are an experienced driver who is less likely to make an insurance claim, you can opt for a higher deductible to reduce costs afterwards. But it is important to be aware of the Rs 100 minimum deductible that must be met even if you opt for the zero voluntary deductible.
No claims bonus
As already mentioned, the no-claims bonus is the most popular way to reduce premium costs. This is a benefit that an insurance company offers the policyholder in exchange for taking care of the vehicle and not making an annual claim.
In other words, for every claim-free year, the insured saves money by receiving attractive discounts or lower premiums when taking out and renewing insurance. With insurance, for example, according to the regulations, you are entitled to a maximum reduction of 20 percent in the first year as well as a discount of 25 percent after two years and a discount of 35 percent after three years and finally a reduced rate of 45 percent after 4 years if none claims are asserted. However, this benefit is not enforceable if you make a minor claim or fail to keep your policy in force three months after your policy expiry date. It is therefore not advisable to claim minor damages instead of paying for the damage yourself. Also, if you decide to buy a car that you trade in for an older one, make sure you don’t defer your bonus to any claim. You can also choose to purchase a no-claim bonus protection to ensure it stays intact even if you try to make a claim.
In addition to the above tips to save a little more, it’s a good idea to look at the different policies and features before you buy. Make sure you read the fine print and understand any hidden costs before choosing the best policy.
(DISCLAIMER: All views expressed are the author’s own and have nothing to do with the Charter or the views of OTV. OTV accepts no responsibility or liability for them.)