Why Your Car Insurance Premium Changes Every Year
Car insurance is mandatory in India, but for many, it is not simply a formality to be fulfilled as it protects the car from unforeseen adverse events. We all love our cars so much and would go to any lengths to keep them safe from any accident or other types of dangers. You must have spent a lot of money to buy your car and the last thing you want is to see it damaged. So, it is always a good idea to buy the best car insurance in India for your four-wheeler.
If you have owned your car for more than a few years, you should notice that your car insurance premium increases each year. During each renewal, you pay a higher premium price for the same level of coverage. Have you ever wondered why this happens even though your car is depreciating? Here is an overview of the annual increase in the value of car insurance and what you can do to keep it low.
Why does car insurance premium increase every year?
The main reason for the increase in your car insurance premium every year is the increase in third-party insurance premium rates through IRDAI. Third-party insurance helps the policyholder obtain financial assistance from his motor insurance company in the event of an accident leading to claims from a third party.
The IRDAI or the Insurance Regulatory and Development Authority of India sets third party insurance premium rates for all cars. At the end of each financial year, IRDAI reviews the loss ratio of motor insurance companies and the total number of claims made by car owners. After considering these factors, IRDAI announces third party premium rates for the coming financial year.
In India, every car is required to have a third-party cover under its car insurance policy. According to the Motor Vehicles Act, 1988, motor insurance is the legal liability of all cars plying on public roads in India with third party coverage. So, whether you have an independent third-party insurance plan or a comprehensive car insurance policy, you will have to pay third party premiums. As a result, car insurance premiums for comprehensive car insurance, including third-party insurance, increase each year.
How To Reduce Your Car Insurance Premium?
Third-party premium cannot be changed even for the best car insurance in India. However, you can reduce your car insurance premium by following the tips below:
- Build your No Claim Bonus (NCB)
One of the best ways to reduce your comprehensive car insurance premium is to build your own no claim bonus benefit. As per this benefit, if you do not make a claim in a policy year, you will be given a concession next year when you renew your policy. This concession grows in value when you manage to avoid claims for multiple years. If you do not make a single claim under your policy for five consecutive years, NCB will allow you to halve your car insurance renewal premium. So, you should try to build your NCB to reduce the cost of your car insurance. You can add the NCB benefit to your policy when you buy car insurance online.
- Avoid making small claims
Every time you make a claim, your NCB is termed invalid and you have to rebuild it. Therefore, you should avoid raising claims that you can afford. If your car has minor damage, repairing it is not expensive. But if you claim for such small losses, you will lose your accumulated NCB, which can help you save more money on the renewal premium than the money spent on car repairs. So, do not make minor claims with your insurance company.
- Install anti-theft devices in your car
The whole idea behind car insurance is to keep your four-wheeler safe. If you can reduce your car risk factor, your insurance company liability will be automatically reduced. The lower the liability of the insurance company, the lower your car insurance premium. So, since motor insurance companies offer discounts on installing security features in the car, you need to install anti-theft devices in your car to prevent theft as well as reduce your car insurance policy premium.