A Step-by-Step Approach to Reducing the cost of your Car Insurance Premium

We await the sale season and then use coupons that offer discounts to save money online. What is our car insurance premium? Do you think it is possible to reduce your insurance premium for cars?

It’s important to us. This is why we’ve created this step-by-step guide on reducing the cost of car insurance.

Car insurance premium is a matter of savings versus coverage

Your car insurance premium is always a considerable sum no matter how cheap your vehicle is in relation to price. The Motor Vehicles Act makes car insurance compulsory.

Thus, it is with great regret that we part with our cash when we purchase or renew our car insurance plan.

You can modify the premium amount in your auto insurance policy. The aim is to not be a victim of future coverage as you try to reduce cost of premiums for the current.

Step 1: Determine the best Insured Declared Valu (IDV) for your vehicle.

The IDV of your car is the maximum Sum Assured under your insurance policy. It’s the amount (calculated at the car’s current market price less the depreciation) which you’ll be responsible for if your vehicle is stolen or damaged beyond repair.

It is evident that the premium rate is calculated on the quoted IDV. The IDV varies across insurers and so does the rate at which premiums are calculated. The choice to choose the IDV is solely on you. The chosen IDV must be the best one. If you set it too high, you will need to pay a greater premium. If you set it too low, you could be able to claim an extremely small claim. A balance must be reached and an optimal level of IDV must be determined.

To determine the best IDV, subtract the depreciation rate that is standardized by IRDA from the market value.

Vehicle age Depreciation rate
Six months or less 5%
6 months to 1 year 15 1 year 15
1 to 2 years 20 20%
3 to 5 years 35%
3-4 Years 40%
4 to 5 years 50%

The age of your car will determine the IDV amount that’s best for you.

Step 2: Look at the coverage.

Once you’ve identified the IDV and have identified the IDV, you can look over the coverage provided by the various plans. A comprehensive insurance policy typically includes two components: third party coverage and personal damage. You may also be able to add riders that permit you to modify your plan and enhance the coverage. Particular attention should be paid to these riders since their inclusion could increase the cost of premiums.

The rider you select should be depending on the needs of your. For instance, a zero depreciation cover is a great option for more modern automobiles, while an engine protection rider is useful if a monsoon cause waterlogging issues within your region and can harm your car’s engine. You can reduce the cost of premiums by picking riders that are relevant to your requirements.

Step 3: Evaluate the most appropriate premium based on the design of the cover.

The IRDA determines the cost for third party coverage. The premium is known as the own damage premium. It differs between insurers and is based on the vehicle’s IDV. Riders are also able to increase the cost. So, compare the different premiums based on two factors which are the calculated IDV as well as any additional benefits that the rider may receive.

Step 4 – Make use of discounts on your policy and accumulate no Claim Bonus (NCB).

If you are transferring your insurance plan to a brand new car or renewing your car insurance policy, you may lower your cost in the event that you’ve accumulated NCB in your previous policy. NCB is permitted if the policyholder does not have any claims during the past year. This NCB lowers the cost of insurance.

If you are purchasing an insurance policy for a new vehicle and are looking for discounts, there may be some within a policy that should be explored for reducing the price.

Step 5 – Transferability

Blindly sticking to one insurance policy when other policies offer a lower premium for the same level of coverage is foolish. You should constantly review your car insurance plan on every renewal. If a cheaper substitute is found you can transfer your policy to enjoy lower rates.

The following steps will result in a significantly less expensive price than what you were originally charged. This tiny piece of advice will make both your wallet happy.

5 Common car insurance questions answered

1. Do I really need to insure my car?

Every state in the U.S. has its own rules and regulations with respect to auto insurance. But almost every state requires that you carry at least a certain amount of liability insurance.

Liability insurance covers any injury or damage that you cause other drivers during an accident.

Driving without insurance can lead to severe consequences. You could pay a hefty fine, have your license suspended, or revoked or even go to prison.

So, yes. Car insurance is an absolute necessity.

2. What happens if I only get the minimum amount required by my state for car insurance?

It is tempting to choose the minimum insurance for your car.

The premiums will be less expensive and you’ll appear to be saving cash in the end. This is only the case when you’re not involved in a car crash. How can you foresee such a thing?

The minimum amount of insurance you’ve got won’t protect you in the event of a serious car accident. Most likely, it will not pay for all the expenses. The other party can easily sue, seize your assets.

While technically you’re only legally required to carry the state minimum for car insurance, we don’t recommend to carry it.

3. Do I still require car insurance even if I don’t drive my car or I’ve sold it?

Although it might seem odd or unwise to pay for insurance for your car, it’s necessary if you don’t drive your vehicle or keep it in storage or sell it.

There are a variety of options you should consider prior to making the decide to cancel your car insurance.
If you’re keeping your vehicle in storage, you can consider changing your coverages. It’s possible to drop only liability and comprehensive insurance. You’ll lower the cost of your insurance by doing this.
Let’s say you have sold your car. Consider switching to non-owner insurance for your vehicle. This type of coverage includes bodily injury insurance as well as property damage liability insurance.
If you are renting a vehicle and you have insurance, it could come in handy when the rental policy for the car has lower limits for liability.

4. Is there anything that will stop me from cancelling my car insurance?

It is advisable to think about it before you decide to end your insurance for your car.
Any lapse in coverage will increase your insurance premiums when you next attempt to purchase insurance.
Sometimes it is an increase of 12 percent. Insurance companies may decide not to cover the person if they do not have continuous insurance.

5. What amount can I expect to spend on car insurance?

The average driver within the U.S. can expect to pay $1,548 a year for car insurance. Don’t put too much value from this number and compare what you pay to it.

Insurance is very personal and is based on your profile as driver. In calculating your rates insurance companies take into consideration everything from your credit score, relationships status, age, where you live, your educational level and occupation, and more.

As mentioned above as well, they will are also looking at your insurance records. Are you liable for a lapse in coverage? What’s your driving history? Filed any claims recently? Gotten any speeding tickets?

Additional Resource:

https://www.usaa.com/inet/wc/auto-insurance?akredirect=true
https://www.tataaig.com/motor-insurance/car-insurance
https://www.mawazna.com/compare-insurance/car-insurance