Tips to reduce your auto insurance premium

Here are few quick tips which can help you to save a little on auto insurance premium.

A vehicle is an asset for the buyer but only purchasing a vehicle won't suffice. One ought to get auto insurance for it. Vehicle Insurance is one of the most important factors to be considered while buying a new car. Car insurance is a way to protect the car owner financially from all the risks involved while driving on road. In India, it is mandated by the government that every car plying on road should be insured.

Mostly, auto insurance is clubbed with huge discounts and freebies to lure more customers. The most attractive being 'free insurance'. The word 'free' attracts maximum attention from buyers but there are hidden clauses in it, which are not disclosed at first. In such case, free insurance provided is only for a year and from second year onwards, it is policyholder's responsibility to pay the premium and get their policy renewed.

Normally, dealers recovers price of the premium by giving lower discounts. Most of the time, free insurance doesn't cover various damages caused to the car by floods, etc so, it is important to go through the fine prints of the policy very carefully. Instead of opting for free insurance, buyers should go for higher discounts and buy the car insurance separately.

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Requesting higher deductibles

Deductible is the amount of money borne by an individual and rest of the amount is paid by insurance company. There are two types of deductible-compulsory and voluntary. For instance, compulsory deductible of Rs 500 would mean that one has to pay Rs 200 of the claim amount and the insurance company pays rest of the amount.

By bumping your deductible up from say Rs 200 to Rs 500, you can reduce their premium by 15 per cent to 30 per cent. And by increasing the deductible to Rs 1,000, one can decrease the cost by at least 40 per cent. But this might also mean that one has to pay more when the loss occurs.

'Those who are confident of their driving ability could opt for a voluntary deductible to save on premium,' Vijay Kumar, president, motor insurance of Bajaj Allianz General Insurance was quoted as saying.

Insured declared value

The market value of car is known as insured declared value. So, by declaring a lower value for car can reduce premium amount. But it can act adversely too, in case of theft one gets lower amount as declared in the insurance policy.

Voluntary additional declarations

Premium charged for a car might differ from one car to another on the basis of the profile of the owner. Many times, the insurance companies do not disclose this but they evaluate the risk related to the vehicle on various parameters like age of the vehicle, type of fuel used, usage of car, age and occupation of the driver.

For instance, it's assumed that diesel-driven cars are used more than a petrol-driven one. So, the premium charged on those cars might be higher by 10 to 15 per cent. Premium charged from businessman is higher as they tend to use car more frequently. So, one should wisely declare the usage of their car and other details as it can help to reduce the premium amount.

Auto insurance is a basic necessity. So, you must get proper auto insurance and by doing detailed research and diligence you can reduce your auto insurance premium too.