You actually don’t know what’s around the corner, especially when you are out on the roads. That’s why it is essential to own at least the minimum car insurance that protects your prized possession against an eventuality.
Car insurance premium is one of the important factors to be considered at the time of buying a plan. There is no point of settling down on a premium that is non-affordable. So, if you find your car insurance premium quite expensive, it’s the time to find out the actual reasons and anything that you can do about it. In this regards, the below are some of the things that you can blame on for paying a higher premium than the others pay. Here we go:
Reason 1: When You Don’t Know Your Need for Buying Insurance
Don’t buy car insurance out of compulsion. It is your true savior is anything goes wrong while driving. You can even customize the plan as per your insurance needs. You might have paid for whatever is suggested by the insurance dealer without giving a second thought while buying it for the first time. Buy gradually when you start knowing your needs and the coverage offered, you will be able to analyse what you want and what you don’t. This way you can avoid being fooled at the time of buying and paying a higher premium. Always consider certain points like:
- Do you live in an accident-prone area?
- Do you own an expensive car?
- Do you travel a lot with family or friends? And so on
If yes the do for comprehensive car insurance with related add-ons to boost the basic policy coverage.
Reason 2: When You Opt for Unnecessary Add-ons
We are not saying that don’t buy add-ons but only the one you actually need. As you know add-ons are come with an additional cost, by adding an unnecessary one, you are adding up nothing but the premium. For instance, if your HDFC Ergo car insurance is clubbed with an add-on for co-passenger but most of the time, you drive alone, it is an unnecessary buy, right.
You should review your car insurance every often and cut down the unnecessary expenses that are on you. Moreover, you should be quite selective while choosing an add-on. Like if your car’s age is more than 5 years, opting for Zero Depreciation, Road-side Assistance or so on might not be a good option. You should buy add-ons as per your requirement only. If not, you are just adding an extra cost only.
Reason 3: When You Ignore Installing an Anti-theft Device
You have heard right! By installing an anti-theft device you can minimize the risk of theft and hence can win the trust of the insurer by being proactive. It will appreciate you for taking such preventive measures. Some insurance providers offer discount for fitting anti-theft device to the vehicle. So, don’t forget to inform the insurer if you already have opted for one. Not mentioning the same, you may miss an opportunity to avail discounts on premium.
Reason 4: When You Claim for Minor Damages
Comprehensive car insurance offers extensive financial protection against internal and external damages to the insured car. The insurance provider bears the loss that can cause a huge monetary drain. But, additionally, you can earn bonus for not claiming your insurance. This is called No Claim Bonus, which is offered in a form of increased sum insured or discount on premium.
This bonus is cumulative in nature that increases with every passing year. The maximum of NCB that you can earn is 50%. However, as soon as you raise a claim, the bonus turns to be zero. So, by not claiming for small damages, you can earn a maximum of discounts.
Reason 5: When You Opt for a Wrong IDV
Insured Declared Value or IDV is the actual market value of your car. At the time of buying comprehensive car insurance, you are always advised to set the right IDV of your car as it is the main factor that decides the cost of your policy. At the time of buying or car insurance renewal, set the IDV as equal to the market value of the vehicle. Setting for a higher IDV will result in higher premium or vice versa. This will directly impact when you claim your insurance policy.
Reason 6: If You don’t Maintain Good Credit Score
Believe us, your credit score plays a significant role when it comes to determining car insurance premium. The insurer may correlate your risky credit score with risky driving. So, if your credit score is not that appealing, it is high time to work on it. Unlike, age or sex where you have no control, credit score is something that you can improve. Try to pay the debts as soon as possible, if not at least make sure you pay the installments on time, try not to use the card and pile on debts. This way you can give your credit score the best chance to flourish.
Reason 7: Your Driving Record Matters
It is a bonus if you can maintain a good driving record throughout. Divers with good driving skills are less likely to face a road accident and this way you can keep your premiums at a lower scale. Usually, young drivers tend to pay a higher premium due to their less driving experience.
The Bottom Line
So, at the time of car insurance renewal, if you feel your premium is way higher, it’s not too late. No doubt, some of the factors that impact the car insurance premium are beyond your control, there are still a handful of options you can utilize to lower your car insurance premium. There are many insurance aggregator platforms that offer a roundup of plans with different premiums. You can compare the existing plan and take a fair decision. This way you can avoid treating your annual premium as burden.