Car insurance is the method of financially securing an automobile. While driving on roads, there always is a risk factor of an accident which even skilled drivers cannot avoid. A small accident may sometimes result in major damage to the vehicle, leading to a heavy financial burden on the owner-driver. Thus, having car insurance is extremely necessary to tide over financial liabilities. Third-party vehicle insurance, for both two-wheelers and four-wheelers, has also been made mandatory by the Motor Vehicles’ Act.
What are the benefits of having car insurance?
Car insurance offers the following benefits:
- Protects car owners from loss or damage caused to their vehicles
- Provides indemnity for damage caused to third parties
- Provides Personal Accident Cover of up to Rs. 15 lakhs to car owners
- Offers add-on covers for occupants or paid driver, if any
- Offers unlimited liability cover for injury claims or death of third parties
What is a car insurance premium?
The amount that a car owner pays to the insurance company on a regular basis, which is generally annual, in exchange for insurance coverage for their vehicle is known as a car insurance premium. After the payment of the premium, the insurance company is liable to pay for the damages caused to the vehicle in an accident or in case of loss of the vehicle.
Car insurance premium calculator
The factors to be taken into consideration for calculating car insurance premium for new cars are:
- The car’s make and model
- The year of manufacture
- Discounts
- Additional coverages
For used cars, the additional factors to be considered are:
- Car registration number
- Details of the vehicle’s current insurance policy
- Details of the previous owner of the vehicle
- Previous year’s insurance claim history
- No claim bonus
The car insurance premium calculator is available online. You just have to fill in the necessary details, and the required premium gets calculated.
What is no claim bonus?
No claim bonus is one of the best benefits of car insurance. When a car owner does not file any claim during a financial year, he or she is given a reward discount on the premium of the renewed insurance. Consider this scenario; you have not made any claim for your car during the financial year 2017-2018. When you renew your car’s insurance for the year 2018-2019, the insurance company will give you a discount on the renewed insurance’s premium.
No claim bonus starts at 20% in the second year upon insurance renewal and can go up to a maximum value of 50% during the sixth year. No claim bonus is a facility given to the holder of the insurance policy and not to the insured car. Therefore, it can be transferred upon change of the vehicle or the car insurance company.
Strategies to reduce car insurance premium
- Avoid accidents – The best method of keeping a low car insurance premium is to drive safely and avoid accidents.
- Increase the deductible – Deductible is the amount the car owner pays from his or her pocket prior to the insurance claim. Having a good driving record with no prior claims helps in increasing the deductible, which will reduce the insurance premium.
- Reduce coverage for old vehicles – Try eliminating the unnecessary additional coverage for old cars, which adds to their insurance cost.
- Stick to a single insurance company – This works well to earn a multi-line discount.
- Pursue smart shopping – Prior to purchasing a new car, call the insurance agent so as to know its insurance cost, as there can be wide variations in insurance premiums.
- Theft protection – Ensure that your cars are kept in garages or are enabled with alarm systems.
To sum it up
There are several strategies which car owners can consider for lowering their insurance premiums. Try to indulge in safe driving practices and maintain your car well. And most importantly pick an insurance that provides the best coverage for your type and brand of car.
