To reduce our spending, we do things like wait until the sales season, use discount coupons, and purchase online. What about the cost of our auto insurance? Is there a method to take that down as well? It matters to us. This is why we created this detailed guide on lowering auto insurance rates.
Cheap vs. Comprehensive Auto Insurance
No matter how inexpensive your car was in terms of its purchase price, your annual insurance premium is always a sizable figure. The cost is unavoidable because it is a legal obligation (the Motor Vehicles Act requires auto insurance coverage).
As a result, while purchasing or renewing our auto insurance policy, we do it reluctantly.
The premium payment for your auto insurance coverage can, to some extent, be modified. In the race to lower premium prices for the present, the idea is to avoid losing out on future coverage.
Contact a Money Expert for more information about car insurance premiums.
Calculate your car’s ideal Insured Declared Value (IDV).
The maximum Sum Assured of your auto insurance policy is determined by the IDV of your vehicle. It is the sum that will be paid to you if your automobile is stolen or suffers irreparable damage (calculated as the market value of the car less depreciation).
The premium rate is based on the IDV quoted. The IDV and premium rate differ between insurers. You alone have the choice of selecting the IDV. This IDV should be the best option. If it is too high, you will be required to pay an unnecessary higher premium. On the other hand, if it is too low, your claim will be relatively little. A balance must be struck, and the best IDV level should be chosen.
Step 1: Determine the ideal amount for your IDV based on the age of your car
You can subtract the standardized IRDA depreciation rates from the market value of the car to choose the best IDV.
- Age of the car Depreciation rate
- less than six months: 5%
- 15% from 6 months to 1 year
- 15-20 years 20%
- 30% for two to three years
- 40% after 3–4 years
- In 4-5 years, 50%
Step 2: Take into account the coverage offered
After determining the IDV, examine the coverage offered by various plans. Third-party protection and own damage cover are typically the two coverage pillars of a comprehensive policy. Additionally, you might be able to personalize your plan and improve the coverage with accessible riders. Such riders should receive special consideration because introducing them will increase the incidence of premiums.
Step 3: Determine the best premium based on the cover
The IRDA sets the price for a third-party insurance policy. It is the own damage premium, which is based on the car’s IDV and differs between insurers. Riders also drive up the price. Therefore, contrast the premium rates based on the computed IDV and any additional rider benefits.
Step4: Utilize policy savings and accrued No Claim Bonus
If you have any accumulated NCB from a previous policy and are switching to a new vehicle or renewing your auto insurance, you may be able to get a lower price. If the policyholder has not filed any claims in the previous year, NCB is permitted.
There may be reductions available for new auto insurance plans that should be investigated to lower the price.
Step 5: Portability
It is unwise to stay rigidly to one insurance plan when alternative options are available that charge less for the same level of coverage. Every time your policy is renewed, you should check it, and if a more affordable option is discovered, you should switch to it to get lower premiums.