When you buy your dream car, a mandatory purchase with it is car insurance. Buying four wheeler insurance offers you the ability to protect you and your car from unforeseen incidents. Since a car is a massive purchase, you will not hesitate to shell out more funds to protect your purchase. Hence, it is always a better idea to protect your car with insurance policies. As the times have changed, you can buy car insurance online after you visit the insurance company’s website and follow specific steps. You also have the ability to carry out online car insurance renewal.
If you have been making premium payments on a car insurance policy for some years, you may have noticed that the insurance premiums will increase almost every year. At the renewal of policies, you may have had to pay higher premiums for the same coverage. But why does this happen? Let’s understand in depth.
Why do car insurance premiums rise every year?
One of the important reasons for the rise in car insurance premium every year is the rise in third-party insurance premium rates by the IRDAI (Insurance Regulatory and Development Authority of India). Third-party insurance will help the insured with financial coverage from their insurance company if an accident has been deemed in third party claims.
The IRDAI will handle the third-party insurance premium rates for every car. After this, the IRDAI will review the loss ratio of insurance companies and the total amount of claims filed by owners at the end of every financial year. The IRDAI will then release the third party premium rates for the next year after taking these factors into account. It is a legal compulsion in India for every car owner to have a third party cover under their policy. Hence, if you have just a third party insurance or comprehensive insurance, you will need to pay third party premiums. This is why there is an increase in the premium amounts for comprehensive car insurance and third party insurance. If you wish to check the insurance premium rates for a financial year, you can check them online. Being updated on these rates can help you with your calculation of car insurance premium.
While you cannot control the third-party premiums, you can reduce the premium amount for comprehensive car insurance policies. If you wish to lower the premium amount for comprehensive policies, listed below are some steps that you can follow:
- No Claim Bonus (NCB):
A simple way of lowering comprehensive car insurance premium is to build the No Claim Bonus. An NCB is a discount awarded if you haven’t filed a single claim in a policy term and will provide you with discounts on the premiums paid for car insurance renewal. If you haven’t filed a claim for five years, you can reduce the renewal premiums down to half.
- Anti-theft devices:
These devices will decrease the probability of your car getting stolen. Since they lower the risk factor of your car, liability on the insurance company will reduce automatically. Hence, installing these devices can help you reduce the premium. Some insurance companies also offer discounts if you have installed these devices.
- Do not file minor claims:
Once you file a claim, you lose the NCB discount and will have to rebuild it. Therefore you should avoid filing the claim for minor damages. For instance, a broken taillight is a minor and affordable expense. So, instead of filing a claim, you can bear the expense from your own pocket.
A deductible is an amount that you pay yourself when filing a claim. While you have to pay the compulsory deductible, you can use the voluntary deductible to reduce the car insurance premium. Increasing the amount you pay in voluntary deductibles will result in a reduced premium amount. But you must opt for a voluntary deductible that you can afford.
- Declare correct IDV:
IDV is the declared value of your car set by the insurance company. IDV is the maximum amount the insurance company will pay you in the event your car gets stolen or damaged beyond repair. If you correctly value the IDV of your car, you may be liable to get a reduced premium.
- Renew policy on time:
It may be beneficial for you if you get the policy renewed before the policy. A missed renewal may lead to an inspection of the car. The inspection will lead to your car insurance premium getting calculated again, which may be high this time considering wear and tear. A failure to renew the policy in time may result in a hike in your premium. Hence, an insurance policy is one of the most effective ways of protecting your car from any incidents. There is an increase in the premiums you pay towards the policy, because of the hike in third-party premiums by IRDAI. The IRDAI reviews the number of files claimed and the loss ratio of insurance companies at the end of every financial year. After examining these factors, they release the third-party premium rates for the coming financial year. Any hike in these rates will impact the car insurance price for your car.