As per the recent guidelines of IRDAI, third- party insurance cover for all new cars and two-wheelers has been made mandatory for a period of three and five years respectively
New Delhi: The insurance premium for new vehicles has become significantly expensive, especially after the Supreme Court made long-term third-party insurance cover mandatory for new cars and two-wheelers. Moreover, not just long-term insurance, the total sum insured for compulsory personal accident cover for owner-driver has also been increased to Rs 15 lakh. With all these implementations in place, motor insurance premium has witnessed a drastic rise in the last few months. However, if treated carefully, you can not only save significantly on motor insurance but can also enjoy added benefits for the same price. Here are few tips that you can refer to while renewing or buying insurance for your new car.
Changes in premium after multi-year policy
As per the recent guidelines of IRDAI, third- party insurance cover for all new cars and two-wheelers has been made mandatory for a period of three and five years respectively. However, while purchasing motor insurance, it is very important for you to know that both the own damage (OD) and compulsory personal accident cover for owner-driver component is not mandatory for three or five years. You can choose to have these components for a single year only. So, if you wish to save on the premium, you should choose to buy a policy with OD cover and CPA cover for owner-driver for just 1 year along with 3 or 5 years (for car & TW respectively) third-party cover.
Transfer No Claim Bonus (NCB)
No Claim Bonus (NCB) in motor insurance is an additional benefit given to the policyholder for not making any claim within the tenure of the policy. In case, you plan to sell your old vehicle and buy a new one, you have the option of transferring the NCB onto your new vehicle in case you have not made any claim within the policy term. This not only helps in saving significantly on the premium but also enhances your goodwill with the insurer. To avail the benefit, it is mandatory to retain the insurance under your name even if you sell the vehicle to anyone else. A no-claim certificate is always provided by the insurer after the required verification.
Better go for high deductibles
In case you are an experienced driver and pretty confident about your driving skills, it is advised to choose voluntary deductible in order to lower the amount of your premium. Deductible, under motor insurance, is an out-of-pocket expense paid by the policyholder while making a claim. As deductible is paid by the policyholder, it makes quite a sense to go for higher voluntary deduction when looking for a lower motor insurance premium.
Select your add-on covers carefully
Like every other general insurance, motor insurance too offers a plethora of add-on covers to choose from in order to make your insurance cover more comprehensive. Some of the popular motor insurance add-ons are zero depreciation (generally available up to 5 years of vehicle age), road-side assistance, engine protection cover, etc. By precisely choosing only the required add-on covers, you can certainly minimise the cost of your car insurance. Let’s take an example of zero depreciation cover. As per market experts, the total cost of depreciation remains low during the first few years of ownership, it is better to opt for zero depreciation cover for at least 3 years of vehicle age.
It is better not to make small claims
It is always advisable not to make small claims for your car or two-wheeler as one of the biggest disadvantages of doing so is that you lose the NCB on renewal. A no-claim bonus is a bonus earned for every ‘claim-free’ year. The NCB can significantly lower your insurance premium as it can go up to a maximum of 50% for 5 consecutive ‘claim-free’ years. In case your claim amount is relatively low, it is better to get the repairs done at your own expenses at any authorized/local workshop. However, in case you feel that the claim amount is much higher than the possible NCB, it is wise to make a claim rather than paying from your own pocket.
Make sure to renew your insurance on time
You will not be eligible for an NCB in case your motor insurance policy lapses and you fail to renew in next 90 days from your expiry. The lapse of NCB certainly increases your insurance premium. Also, the process of inspection becomes mandatory once a motor policy lapses, it is always better to renew the policy before the due date. Though you receive renewal reminders from your insurer, it is a good practice to add a reminder about the due date of your insurance renewal.
It may to be noted that unlike a motor policy, you don’t need to undergo any inspection or documentation for your TW insurance renewal even if your policy gets expired. However, you must remember to renew the policy within 90 days post expiry otherwise you will lose the NCB.
Buy online and choose your insurer wisely
It is always a safe and much sought after practice of visiting websites of online insurance aggregators for buying affordable and best motor insurance. By buying insurance online, you can easily compare the prices, features and benefits of different insurers and select one as per your individual needs and requirements. Comparing insurance online helps you to better understand the different elements in your insurance policy. Moreover, selecting the right insurer is one of the most important aspects of buying motor insurance. Before making a final call, it is suggested to check the claim settlement ratio and the total number of authorised workshops.