8 Smart Tips to Save on your Car Insurance
Car insurance is a recurring expense. For a 10 lakh rupees car, insurance premium begins at around 30 to 35k per year (bumper to bumper). We buy insurance to avoid having to spend a major expense in case of accident or theft. Insurance gives us peace of mind. But there’re times when we unknowingly overspend on insurance. This post lists a set of tips that will help you save your car insurance premium spend.
1. Negotiate with car dealer during initial purchase. Dealers usually have significant margins on the first insurance premium you pay when you buy a car. Most customers miss to negotiate on this part and only bargain for some free accessories. Check the cost of various insurance options online. If you feel that the dealer’s insurance quote is very high, press for a discount or offer to get insurance done outside. Usually this works and you will get to save.
2. Know the terms: Insurance final premium varies based on multiple terms and factors. A zero-depreciation add-on means your IDV will be at par with ex-showroom price. A bumper to bumper insurance is expected to cover all major and minor incidents. The 3rd party liability component is mandated by the law of the land. When you compare policies, it is important to know what exactly you’re paying for. If you feel you don’t need bumper to bumper, you can say NO to it. If you wish to take only 3rd party liability insurance, you can insist on it (law mandates all vehicles should have 3rd party liability insurance, so that in case of accident/3rd party damage it can be covered- if you don’t want cover for own damage, it is your choice, though not recommended)
3. Consider long term: Instead of one-year premium, you can consider 3 or 5 year car insurance. You will be able to bargain better as the amount is larger and saves you the trouble of yearly renewal.
4. No Claim Bonus- If you’ve not claimed insurance during the previous term, you are eligible for a no claim bonus during renewal. Be sure to get it during your car insurance renewal.
5. Declaring lesser IDV- Another way to save on premium is to declare the car at a lesser IDV (Insurance declared value). Your car may be worth 10 lakhs, but you can declare an IDV of 6 lakhs. This will proportionately reduce your insurance premium, but at the same time, the risk will be proportionately higher. In case of total loss, you will get only 6 lakhs and not 10. This approach is worth considering if your usage of the car is very low and you’re not expecting any major incident or in case it occurs, it is okay to take some risk and receive only part of the loss from insurance.
6. Identify right garage for repairs- From your trusted friend or from the insurance company, have a list of garages that can repair the car at no cost to you. This will be lot convenient in case of a break down and saves valuable time and money than having to scout around for one when you face an emergency. Cashless repair also means the garage would do only the required repairs/replacements and won’t charge you unnecessarily.
7. Renew before expiry- If the car insurance policy is renewed before it expires, you won’t have to take the car to an inspector. Since the policy is in force, renewal will be easier. This saves some time and effort when you renew your policy.
8. Buy a cheaper car and rent bigger ones on need basis. If you buy a 16-20 lakh SUV, your annual insurance premium will be in the range of about 60k INR or 5k per month. Unless you have the real need/appetite for an expensive car, you can consider buying a cheaper car and thus save on car, insurance and maintenance and rent an SUV/luxury car when it is really needed. This option can save you lots of money.
Insurance is a necessary evil but when things go wrong, it will be a blessing in disguise. So don’t ignore it. Happy motoring. Drive safe.
1. Negotiate with car dealer during initial purchase. Dealers usually have significant margins on the first insurance premium you pay when you buy a car. Most customers miss to negotiate on this part and only bargain for some free accessories. Check the cost of various insurance options online. If you feel that the dealer’s insurance quote is very high, press for a discount or offer to get insurance done outside. Usually this works and you will get to save.
2. Know the terms: Insurance final premium varies based on multiple terms and factors. A zero-depreciation add-on means your IDV will be at par with ex-showroom price. A bumper to bumper insurance is expected to cover all major and minor incidents. The 3rd party liability component is mandated by the law of the land. When you compare policies, it is important to know what exactly you’re paying for. If you feel you don’t need bumper to bumper, you can say NO to it. If you wish to take only 3rd party liability insurance, you can insist on it (law mandates all vehicles should have 3rd party liability insurance, so that in case of accident/3rd party damage it can be covered- if you don’t want cover for own damage, it is your choice, though not recommended)
3. Consider long term: Instead of one-year premium, you can consider 3 or 5 year car insurance. You will be able to bargain better as the amount is larger and saves you the trouble of yearly renewal.
4. No Claim Bonus- If you’ve not claimed insurance during the previous term, you are eligible for a no claim bonus during renewal. Be sure to get it during your car insurance renewal.
5. Declaring lesser IDV- Another way to save on premium is to declare the car at a lesser IDV (Insurance declared value). Your car may be worth 10 lakhs, but you can declare an IDV of 6 lakhs. This will proportionately reduce your insurance premium, but at the same time, the risk will be proportionately higher. In case of total loss, you will get only 6 lakhs and not 10. This approach is worth considering if your usage of the car is very low and you’re not expecting any major incident or in case it occurs, it is okay to take some risk and receive only part of the loss from insurance.
6. Identify right garage for repairs- From your trusted friend or from the insurance company, have a list of garages that can repair the car at no cost to you. This will be lot convenient in case of a break down and saves valuable time and money than having to scout around for one when you face an emergency. Cashless repair also means the garage would do only the required repairs/replacements and won’t charge you unnecessarily.
7. Renew before expiry- If the car insurance policy is renewed before it expires, you won’t have to take the car to an inspector. Since the policy is in force, renewal will be easier. This saves some time and effort when you renew your policy.
8. Buy a cheaper car and rent bigger ones on need basis. If you buy a 16-20 lakh SUV, your annual insurance premium will be in the range of about 60k INR or 5k per month. Unless you have the real need/appetite for an expensive car, you can consider buying a cheaper car and thus save on car, insurance and maintenance and rent an SUV/luxury car when it is really needed. This option can save you lots of money.
Insurance is a necessary evil but when things go wrong, it will be a blessing in disguise. So don’t ignore it. Happy motoring. Drive safe.
Very helpful tips. Thank a lot.
ReplyDeleteMy pleasure
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