Step-By–Step Method to Reduce Your Car Insurance Premium
We await the sale season and then use coupons for discounts to save money online. What about our car insurance premium? Can you lower the cost of car insurance?
It is important to us. We are concerned about it, which is why we’ve put together this step-by-step guide to lowering your car insurance premium.
Insurance premium for cars – Savings VS . Coverage
Whatever the price of the cost of your vehicle is, your car insurance premium will always be high. The Motor Vehicles Act makes car insurance mandatory.
Therefore, it’s with heavy hearts that we hand over our money when buying or renewing our car insurance plan.
You can modify the amount of premium in your auto insurance policy. To avoid missing the future coverage, it is essential not to cut back on the cost of your premiums in the past.
Step 1 – Determine the optimal Insured Declared Value (IDV) of your car.
The IDV on your car is the actual sum that you are guaranteed under the insurance plan for your car. It’s the amount (calculated at the current market price less the depreciation) which you’ll be responsible for if your vehicle is stolen or damaged beyond repair.
The IDV that is quoted IDV determines the rate of premium. The premium rate and the IDV will differ between the insurers. The option to select the IDV is solely on you. The chosen IDV should be of the highest quality. Too high and you unnecessarily be paying a higher cost, too low and you receive a modest claim. The balance has to be met and an appropriate amount of IDV should be selected.
In order to determine the most suitable IDV You can subtract the depreciation rates standardized by IRDA from the car’s market price.
- The age of the vehicle. The rate of depreciation
- Minimum 6 months 5%
- From 6 months to 1 Year 15 percent
- 2-5 years 2-5 years
- 3 years – 30%
- 3-4 years 3-4 years
- 4-5 years 50%
The age of your car will decide the IDV amount which is the best one for you.
Step 2: Think about the coverage.
Once you’ve identified the IDV and have identified the IDV, you can look over the coverage provided by various plans. A comprehensive policy usually includes two components that are third party coverage and personal damage. There are also insurance policies that permit you to modify your plan and enhance the coverage. These riders should be considered as they could increase your premium incidence.
The riders you choose should be based on your requirements. A zero-depreciation policy is well for older cars and an engine protection rider could help in the event of water logging or other issues that may affect your vehicle’s engine. Cut down the frills but opt for riders which pertain to your requirement and you can substantially lower the premium.
Step 3: Determine the most appropriate premium based on the cover.
The price for a third-party insurance is fixed by the IRDA. The premium is known as the own damage premium. It is different between insurers and is based on the IDV of the vehicle. Riders may also raise the cost. Also, it is important to compare premium quotes on two parameters – the computed IDV and any additional benefits that the rider may receive.
Step 4: Utilize the discounts on your policy and accumulate No Claim Bonus (NCB).
If you are transferring your insurance plan to a brand new car or renewing your car insurance policy, you may reduce your premium if you have any accumulated NCB in your previous policy. NCB is allowed if there have been no claims within the past year. This NCB lowers the cost of insurance.
If you’re trying to reduce your premiums, there may be discounts available for those who purchase a new policy.
Step 5 – Portability
Blindly sticking to one insurance policy while other insurance plans offer cheaper premiums for the same coverage is foolish. You should constantly review your car insurance plan at every renewal. If a cheaper substitute is found you should switch your policy and enjoy lower costs.
These steps will result in an amount that is lower than the one you were originally charged. This simple piece of advice will leave you and your bank account happy.
5 Common car insurance questions answered
1. Wait, do I actually require insurance for my car?
Every state within the U.S. has different rules and regulations when it comes to auto insurance. However, the majority of states require that you have at least a certain amount of liability insurance.
Liability insurance covers any injuries or damage you cause other drivers during an accident.
In the event of an accident, driving without insurance could lead to severe consequences. A heavy fine could be imposed, your license could be suspended or revoked , or you could end up in prison.
So, yes. Car insurance is an absolute necessity.
2. But, what do I do if I just get the minimum amount of car insurance required by my state?
It’s tempting to go with the minimum required by the state for automobile insurance.
The premiums will be less expensive and it will appear that you’re saving money over the long haul. This only applies when you’re not involved in a car crash. And how can you predict the possibility of such an event?
If you’re involved in a severe car accident and you have the minimum amount of car insurance probably won’t do much to protect you. Most likely, it will not cover all expenses. It is possible to be sued by the other party and have your assets confiscated and sold.
Although technically, you’re legally required to get the minimum state-mandatory insurance, it’s not advised to do this.
3. What if I no longer own my car, or sell it? Do I still require insurance for my car?
Although it may appear odd or wasteful to pay insurance on your vehicle, it’s necessary if you don’t drive your vehicle, or store it in storage, or even sell it.
- There are several options that you should consider prior to making the decide to terminate your car insurance.
- You can alter the coverage you have if you store your car. You may choose to take only liability and comprehensive insurance. You’ll be able to reduce what you’re paying for your premium.
- Now let’s say you’ve sold your car. You might want to consider switching to non-owner vehicle insurance.This type of insurance is a bodily injury insurance as well as property damage liability insurance.
- If you lease a car the coverage may help if the rental car policy has lower liability limits.
4. What’s holding me back from cancelling my auto insurance?
- If you decide to cancel your auto insurance, think twice.
- A lapse in coverage could increase your insurance premiums every time you attempt to purchase insurance.
- Sometimes, this is an increase of 12 percent. Insurance companies may choose not to protect the person if they don’t have continuous insurance.
5. What is the average cost of insurance for cars?
The average driver within the U.S. can expect to spend $1,548 annually for car insurance. Don’t put too much value from this number , and make sure you examine the amount you pay versus it.
Insurance is very personal. It’s determined by your driver profile. Insurance companies look at everything when determining your rate. This includes credit score, your relationship status and the age.
Like I said as well, they will are also looking at your insurance history. Are you liable for a lapse in your coverage? What’s your driving history? Have you filed any claim in recent years? Have you been issued an infraction for speeding?
Additional Resource:
https://www.iii.org/article/what-auto-insurance
https://www.libertymutual.com/vehicle/auto-insurance
https://www.geico.com/auto-insurance/