Step-by-Step Method to Reduce the cost of your Car Insurance Premium
We are waiting for the sale season and then use discount coupons to save money on the internet. How about the car insurance cost? Can we lower it?
We care about it. We care about it so we’ve created this step-by-step guide to lower your insurance costs for your vehicle.
Car Insurance Premium Saving from Coverage
However low the cost of your vehicle is, your car insurance premium will be always high. The Motor Vehicles Act makes car insurance mandatory.
So, when we renew or buy car insurance, we do it with heavy hearts.
You can alter the amount of premium you pay for your insurance coverage for your vehicle to some extent. In order to avoid missing any future coverage, it is essential not to cut back on premium costs for the past.
Step 1: Determine the optimal Insured Declared Value (IDV) of your car.
Your car’s IDV is the highest sum that you are guaranteed under your car insurance policy. It’s the amount (calculated at the current market value less depreciation) which you’ll be responsible for if your vehicle is stolen or damaged beyond repair.
The IDV that is quoted IDV determines the premium rate. The rate of premium and the IDV can vary between insurers. The decision to select the IDV is solely on you. The IDV you select should be the best. Too high and you’ll pay a higher premium If you choose to go too low, you receive a modest claim. The balance has to be met and an appropriate amount of IDV should be selected.
To determine the best IDV You can subtract the depreciation rates that are standardized by IRDA from the car’s current market price.
- The rate of depreciation for old vehicles
- Less than 6 months 5%
- 6 months to 1 year 15%
- 2-5 years 20%
- 3 years – 30 %
- 3-4 years 3-4 years 40%
- 4 to 5 years 50%
Your car’s age will determine the IDV amount that’s best for you.
Step 2: Think about the coverage.
After you have identified the IDV look at the coverage offered by various plans. A comprehensive insurance policy typically includes two components: third party coverage and your own damages. Also, there might be riders available which permit you to tailor your policy and increase the coverage. These riders should be considered because they can raise your risk of premiums.
The rider you select should be according to your needs. For example, a zero depreciation cover can be a boon for the newer automobiles, while an engine protection rider is helpful if monsoons causes water-logging problems in your locality and endangers your car’s engine. Take away the frills, but opt for riders which are appropriate to your requirements and you can substantially lower the price.
Step 3: Evaluate the best premium , based on the coverage.
The premium for a third party cover is fixed by the IRDA. This premium is called the own damage premium. It differs among insurers, and is calculated based on the vehicle’s IDV. Riders too increase the premium. Check the quotes for premiums by comparing two parameters that are computed by the IDV and additional benefits.
Step 4: Utilize discounts on policies and accrued No Claim Bonus (NCB)
You may be able to lower your cost if there’s any NCB remaining from your old policy. NCB is permitted in the event that the policyholder doesn’t make any claims in the previous year. This NCB lowers the cost of insurance.
If you are looking to lower your premium, there may be discounts for people who purchase a brand new insurance policy.
Step 5 – Transferability
It’s a mistake to stick with one insurance company without a second thought when there are better plans that provide the same coverage and cost less. It is essential to examine your insurance coverage for cars every renewal. If you come across an alternative that is less expensive, you can transfer your policy to take advantage of lower costs.
These steps will result in an amount that is lower than the one you initially paid. This little bit of advice is, therefore, sure to make your pockets and, consequently, you content.
5 Common car insurance questions answered
1. Do I really require car insurance?
Every state has their own regulations and rules in relation to car insurance. However, the majority of states require that you have at the very least a certain amount liability insurance.
Liability insurance covers any injuries or damages you cause the other drivers involved in an accident.
Uninsured driving can result in severe penalties. A substantial fine could be imposed, your license could be suspended or cancelled, or you could be in jail.
So, yes. It is true that you need insurance.
2. What is the case if I can only obtain the minimum amount of insurance required by my state?
It’s tempting to pick the state-mandated minimum car insurance.
The premiums will be less expensive and it’ll seem like you’re saving money in the long run. But only when you don’t get involved in an accident with a vehicle. What can you do to prevent such a thing?
If you are involved in an accident that is serious, having the minimum amount of insurance on your vehicle will do very little to safeguard you. Most likely, it will not cover all expenses. You could be sued by opposing party, and your assets could be taken and sold.
While technically , you’re legally required to get the minimum required by the state for auto insurance, it’s not recommended to carry it.
3. Do I need to have car insurance even if I don’t use my car, or if I’ve traded it in?
While it may seem strange or inefficient to pay for car insurance, it is necessary if you don’t drive your vehicle or keep it in storage, or even trade it in.
- There are many options you should consider prior to making the decide to stop your car insurance.
- If you’re storing your car in storage, consider changing your coverages. You could opt to get only comprehensive and liability insurance. You’ll save money on the cost of your insurance by doing this.
- Let’s say that you’ve sold your car. Consider changing to non-owner auto insurance. This type of coverage includes bodily injury and property damage liability insurance.
- This type of insurance could be helpful in the event that you lease a car.
4. What’s stopping me from canceling my insurance for my car?
- If you decide to cancel your auto insurance, consider a second thought.
- The cost of your insurance will increase If you’ve lost coverage.
- Sometimes, it’s an increase of 12 percent. Other times insurance companies have the option of choosing not to cover you since there isn’t a continuous insurance policy.
5. What is the cost average of car insurance?
A typical American driver could anticipate paying $1548 annually for insurance on their vehicle. However, don’t put too much stock on this number. Compare what you pay against it.
Insurance is very personal as it is determined by your character as driver. Insurance companies look at everything when determining your rate. This includes your credit score, relationship status and the age.
Like I said, they are also looking at your insurance records. Do you have a gap in your coverage? How’s your driving record? Filed any claims recently? Did you receive any speeding tickets?
Additional Resource:
https://www.insurancedekho.com/car-insurance
https://www.moneysupermarket.com/car-insurance/
https://www.allianz.com.au/car-insurance.html
