How to Lower Your Vehicle Insurance Premium Without Sacrificing Coverage?

Vehicle insurance is mandatory in India without which you might have to pay a fine or face imprisonment or both. Vehicle insurance has two sections: Own damage and Third party. Third party premium is decided by the Insurance Regulatory and Development Authority of India and is the same across all insurance companies. On the other hand, own damage premium can be fixed by insurance companies subject to the ceiling imposed by IRDA. So, if you want to reduce your vehicle insurance premium without sacrificing the cover, it would be possible only with the own damage section as the third party premiums cannot be tampered even by the insurance company. 

Here are the ways in which you may reduce your vehicle insurance premiums without sacrificing your coverage. 

1. Compare & Buy: The first and foremost thing which doesn’t require much time is to compare and purchase vehicle insurance policy. When you compare the premiums between insurance companies, you might have an option to even negotiate with the insurance company to further reduce the premium. Some insurance companies offer high discounts on certain models whereas some others offer high discounts on other models. It might not be possible for every insurance company to offer discounts on the same model or for that matter every model. The discounts offered by insurance companies depend on the loss ratio of that particular model. For this reason, if you check with only one insurer then you might not have a chance to reduce the premium. Therefore it is advisable to check with more than one insurer before making a vehicle insurance purchase decision. This is the best way to find the insurer who can offer the lowest premiums without compromising on coverage.
    
2. Choosing the appropriate IDV: The Insured Declared Value of the vehicle is the value based on which the premium for the vehicle is calculated. Earlier every Insurer would depreciate IDV by a certain percentage at the time of renewal. This practice ensured that the IDVs offered by most Insurers used to remain uniform. But these days you can find insurers offering different IDVs. As a Customer what you need to understand is what is the IDV that you should insure your vehicle for? To understand this, you need to understand the fact that IDV is the maximum liability of the Insurer i.e. the Insurer would not pay claims beyond the IDV for a policy. Also, claims where the Insurer is paying the IDV would be cases of total loss which could either be because of a burglary or your vehicle suffering damage where it is better sold as scrap. Both of these are extreme cases. It is therefore prudent to choose your IDV wisely. Because your IDV would decide the premium you would have to pay.
   
3. Deductibles: The other way to reduce the vehicle insurance premium is to opt for deductibles. Deductibles also known as excess refers to a percentage of claim amount that has to be borne by the insured customer. Deductibles in a sense transfer a part of the responsibility to the insured customer. Deductibles are of two types: Compulsory/ Mandatory and Voluntary. Every vehicle insurance policy comes with a mandatory deductible that could go up to Rs.2500 depending on the cubic capacity of the vehicle. On the other hand, voluntary deductible can be chosen by the insured to reduce the premium without affecting the cover. Higher the voluntary deductible, lower would be the premium. But, higher voluntary deductible translates to greater responsibility on the insured customer. It is to be noted that voluntary deductible would be in addition to the compulsory deductible. 
   
4. Delete unnecessary add-ons: The other important thing to do in order to reduce vehicle insurance premium is to delete the unnecessary add-ons. For instance, there are many add-ons available for vehicle insurance customers and you need not opt for every add-on as it would unnecessarily increase your premium. Instead you may decide to choose add-ons based on your requirements. For example, if you are residing in a hilly area, the chance of floods damaging your vehicle are low. In such cases, it would be better not to take the engine protection cover. This logic should be applied carefully based on the situation in your area. Similarly, for older vehicles there would be less need to take add-ons as the Insured declared value for old vehicles would reduce drastically. 
   
5. Delete PA cover: Every vehicle insurance policy would be accompanied by a mandatory personal accident policy that compensates the insured or their family members in case of death or disability. The mandatory PA cover has a sum insured limit of Rs.15 lakhs and would be given to the owner of the vehicle in whose name the vehicle is registered and the policy is issued. But, if you have more than one vehicle, it is not necessary to take PA policy for every vehicle. Instead, you may choose to take a single personal accident policy for all your vehicles registered in your name. This way you may reduce a certain amount of premium payable without compromising on the coverage in your vehicle insurance.

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