Wednesday, July 26, 2017

How to Lower Your Car Insurance Premium


Your car insurance premium is lower if you are a doctor or a CA. Know what else affects premiums


When you are rearing to buy a new car, insurance premium is a remote consideration in deciding the model. However, the premium can vary markedly depending on several factors, such as the car model, year of manufacture and fuel option, even unlikely ones like fuel tank, safety devices and accessories. The difference in premium can range from 2.5-15%.



Then there are cars that insurers are loath to covering. "Tata Sumo, Chevrolet Tavera and Toyota Qualis have higher premiums as these may be registered in individual names, but are often used for commercial purposes," says an insurance broker.

Here are some factors to consider before getting in the driver's seat.

Fuel option: The premium for cars that run on petrol is lesser than for those that run on diesel, compressed natural gas (CNG) or liquefied petroleum gas (LPG). The reasoning is that a person who opts for diesel engine has higher usage and wants to keep the fuel cost down. "A diesel car's premium is 10-15% higher than a petrol car's. The rates are similarly high for the cars running on CNG or LPG," says Vijay Kumar, president (motor insurance), Bajaj Allianz General Insurance. It's not just the fuel but also the fuel tank that can raise the premium. The cars where fuel tanks are made of fibre are charged 3-4% higher premiums.

How to Lower Your Car Insurance Premium


Safety devices: Insurers prefer gear and steering-wheel locks, air bags, sensors and other anti-theft or life-saving devices. These have to be approved by the Automotive Research Association of India. Lower premiums also kick in if cars have advanced anti-theft features. "There is a 10% discount on Maruti models because these have iCAT systems in place," says an insurance expert.

Insurers also look at other parameters such as resale value. Sports-utility vehicles (SUVs) are coveted by carlifters because of their high resale value. SUVs are used as public transport in many parts of the country. "If you own an SUV in north India, your premium goes up by nearly 20%," says Rahul Aggarwal, CEO, Optima Insurance Brokers.

Accessories: Many owners fit their cars with top-end audio systems and lights. These draw higher premiums.

Spare Parts: Some cars may be priced low but could invite a higher premium because of expensive spare parts. "The cost of repairs of some imported models is high. On the other hand, low-end cars have more 'local' content and so come with a 10-20% lower premium," says a dealer.


What insurers Prefer*

FOR CAR
  • Petrol engine.
  • Installed with anti-theft devices.
  • Safety features like air bags.
  • High-end models.
  • Non-commercial usage.
  • Models that are not accident-prone.
  • Driven in a non-metro.
  • Recent manufacturing.
  • Uses Indian spare parts.
FOR DRIVER
  • Doesn't wear spectacles.
  • Is a doctor or a chartered accountant.
  • Aged between 30-60 years.
*This may differ marginally with insurance provider.


Car Colour: Though internationally some insurers use colour as a factor in deciding premium, in India, the practice is still to catch on. So why should a person driving a red car pay more than one driving a white car? "The colour is just a proxy for buyer behaviour. So a red car is more prone to accidents than a white car as the person who likes red is considered an aggressive driver," says Sanjay Datta, head (customer service), ICICI Lombard General Insurance.

Profile of Owner: Even an owner's profession and lifestyle come into play. Insurers prefer owners in more 'respectable' professions and who those who are more cautious. Insurers think that if you attend safe-driving seminars organised by, say, Automobile Association of India (AAI), you are more likely to take better care of your car. "They offer a discount of 5% to car owners who are members of AAI. Similarly, professionals such as doctors and chartered accountants get a 5% discount," says Optima's Aggarwal.

Of late, companies have started considering age as well. Owners above 45 years old are considered careful drivers and, hence, pay a low premium, while those below 20 years pay a higher one.






Before you Bargain: "Lower premiums may mean reduced cover. For instance, some companies had discontinued the cover for damage caused by floods. Only when the floods hit Mumbai, did car owners realised that flood cover was not in the policy," says Mukti Adwani, a car insurance consultant.

So before you press the accelerator and drive off, read the fine print. Know how much insurance cover you have for your car. It's better to be safe than sorry.

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