How to Get Best Deal on Motor Insurance

'Save 20% on your car insurance.' You may have noticed this or similar such claims screaming for your attention from the wayside hoardings on your drive to office. Instinctively, you ask yourself: Really? Is it possible? 

Typically, you would have forgotten all about it by the time you reached office. But, if you had fallen for the claim, would you have managed to reduce your motor insurance premium by 20%? Not really, say insurance experts. If you are buying a new car, it is definitely easy to get a “very cheap” cover. However, if you are shopping for a cover for your old car, don’t look for hefty savings, they warn. You can instead try your luck online for a small saving, they say. 

“Some insurers offer the best insurance rates to customers going online through the website. Generally, the savings quoted in advertisements are in comparison to the premium offered by other insurers for the same vehicle,” says Amitabh Jain, VP - customer service (motor), ICICI Lombard. 

As for those fabulous offers that come with the new car, it is a different ballgame. Car manufacturers, dealers and insurers bundle offers, offering free insurance or subsidised ‘one-rupee’ insurance covers as a part of the package deal. 

“With car sales dipping by the day, car manufacturers are aggressively marketing these bundled offers to incentivise prospective car buyers,” says Vijay Kumar, head of motor insurance at Bajaj Allianz General Insurance. 

However, the story is totally different when it comes to renewing your car insurance cover. This is because a number of factors, such as the loss experience, make and model of the car, RTO location, fuel type and so on come into play in determining the premium amount. 

Your claim history also has a say in the premium amount. If you haven’t made any claim in the previous years, then you get a benefit from the insurance company in form of a no-claim bonus (NCB). If you are a good driver with no or less claims history, you still stand a good chance. However, you can try your luck online and try to get multiple quotes for car insurance to see whether you can save some money. 

CASH IN ON WEB OFFERS 

Insurers say online insurance covers are cheaper by at least 5%. The logic is simple. The online medium lowers transaction costs for the insurance company and the company passes on this benefit to the customer in the form of lower premium rates. 

“For renewals, one can look for quotes from multiple insurance companies. Some of the companies offer the best quote when customers go online,” says Amitabh Jain, VP - customer service (motor), ICICI Lombard. 

Insurance aggregators have made the task easier for car owners to get multiple quotes from different insurance companies. These portals, such as Policy Bazaar, Click2insure, Insurance Mall, etc, which are just like travel portals, give premium quotations based on the make and model of a car. 

“Unlike a standalone agent who represents a particular insurance company, an aggregator collates information of different insurers. If an individual wants a cashless claim for his Hyundai car, an aggregator can guide him to HDFC Ergo and a Maruti car owner to National Insurance. We are in a position to guide the customer by mapping his needs and guide him to the right product,” says Rahul Aggarwal, CEO of Optima Insurance Brokers, and CEO, click2insure.in. 

This will help you identify the best insurance deal available for the make and model of your car. Besides aggregator websites, you can also check with a couple of authorised service stations to get an idea as to which insurer offers the best deal for your car’s make and model. 

However, the initial premium quotes given by the aggregator is based purely on the make and model of the car. The final quote may vary based on finer details of the car. Once you identify the insurer offering the cheapest insurance deal, cross-check the final price offered by the aggregator and the company website before purchasing the policy. 

“You can renew your policy online even if you would have originally bought a policy from your car dealer. Like a first-time buyer, you have to key in the relevant information and sign up for the policy that suits your requirement. The online shopping website will courier the scanned copy of a cover note and subsequently replaces it with the original policy document. The cover note is the actual proof in your hands till you get the original document,” says Aggarwal. 

Most of these websites have secured payment gateways to carry out online transactions. Also look for “https” in the URL address of a website — the 's' indicates the site is secured. 

CHECK FOR TIE-UPS WITH NEIGHBORHOOD GARAGE 

If you frequent the garage/service station in your neighbourhood for regular servicing, you can check out the premium quotes offered by those garages in tie-up with insurers. 

“Often big dealers have tie-ups with specific insurance companies and become a part of their cashless network. In such cases, the garage owners/employees themselves take care of issues related to claim settlement because of the nature of their professional relationship,” says Niraj Jain, CEO of insurancemall.in, an insurance aggregator. 

“The flip side, however, can be that they may overcharge you in the final bill which will add some loading to your renewal premium.” 

In such cases, you can seek an independent online premium quote from the insurer who has tied up with the service station. You may benefit from lower rates and still enjoy the benefits of the tie-up arrangement between the service station and the insurance company. 

COMPARE PRICE AND FEATURES 

Don’t just settle for the cheapest cover available. Many insurance policies look similar, but there are a few important factors you should pay attention to. 

For example, you should not opt for lower insured declared value (IDV) in a bid to opt for lower premium. IDV is the compensation you get in case of theft or total loss of vehicle due to accidental damage. 

“Ideally, the IDV should not be less than 15% in the second year and 20% in the 3rd year,” says Jain of insurancemall.in. 

Secondly, you should look at the claims history of the company. “Car insurance being claim intensive, car owners have to look for the insurer’s experience and the claim settlement history. In fact, rating agencies have rated insurance companies based on their claim-settlement history,” says Kumar. 

Factors that Increase Car Insurance Premium 

1 Diesel car 

Reason: People use it for longer drives, on highways and as commercial vehicles due to cost efficiency. This increases the risk of an accident 

2 LPG and CNG car 

Reason: It has an element of risk, especially if the LPG/ CNG kit is not factory-fitted 

3 Geography and RTO registration 

Reason: The northern belts of the country as well as some belts in southern India are categorised as risky zones based on claims experience and history. Hence, vehicles from these parts of the country are subjected to relatively high premium 

4 Imported car or spare parts 

Reason: Lower cost efficiency if the service station has to import spare parts 

5 Rash driving and frequent claims 

Reason: You lose out on no-claim bonus and the insurer will load the premium amount to factor in the risk factor