Reasons why car insurance premiums increase annually?
In India, four-wheeler insurance is mandatory, and it is not an unnecessary compulsion as it protects your vehicle from unforeseen adversities. Since we love our cars dearly, we would not mind going to any extent to keep them safe from all dangers and threats. Therefore, it is best to buy the best car insurance for your vehicle. If you owned a car for more than a couple of years, you might have realised that the insurance increases yearly.
When you do car insurance renewal, you may pay a higher premium for the same level of coverage. Have you wondered why does that happen despite the reduction in the car value owing to depreciation?
Why does the premium rise every year?
The increase of the car insurance policy premiums is the rise in the third-party premium rates by IRDAI. For the unversed, the third-party plan helps the policyholder get financial assistance from their insurer if the accident results in any third-party claims. The IRDAI sets up third-party premiums rates for all vehicles.
At the end of the financial year, IRDAI reviews the loss ratios of the motor insurance companies and the number of claims raised by the owners. After considering these factors, the IRDAI sets up third-party premium rates. Now, the third-party policy is compulsory under the Motor Vehicles Act, 1988.
Therefore, whether you own a standalone third-party or comprehensive policy, you need to pay third-party premiums. Hence, the insurance premiums increase every year for third-party and comprehensive plans.
Ways to maintain low premiums always
Third-party premiums cannot be changed for even the best of the car policy. However, you can lower the premiums by following the mentioned tips –
Build your No Claim Bonus
One of the best ways to lower the comprehensive insurance premiums is by building the No Claim Bonus. It comes in handy during the car policy renewal as it reduces the premiums by half if you go without raising any claim for consecutive years. Thus, build NCB and lower your premiums, thereby reducing the insurance costs.
Avoid raising minor claims
The moment you make a claim, the NCB becomes zero, and you need to rebuild it. Hence, avoid raising affordable claims. If the vehicle sustains minor damages, getting them repaired will not be expensive. But if you do raise claims for minor damages, you lose out on the accumulated NCB that helps you at renewal.
Install anti-theft devices
The idea behind buying insurance is to keep your vehicle safe. If you reduce the risk factor of your vehicle, the insurer’s liability automatically reduces. Lower the liability of the insurer, lower premiums you get charged. Hence, install anti-theft devices for preventing theft and lowering premiums of the car.
Avoid buying unnecessary add-ons
Add-ons are for additional protection that you buy for your vehicle by paying higher premiums. However, not all add-ons work for different cars. Buying unnecessary covers only add to your comprehensive insurance premiums.
Do not do modifications
Any modifications you make to your vehicle impacts the insurance premiums. High-end changes increase the insurers’ liability, thereby increasing the insurance premiums. Thus, avoid unnecessary changes if you want to maintain lower premiums.
Car insurance premiums depend on various factors. While the third-party annual increase in premiums is not in your hands, take the necessary measures to keep the comprehensive plans under control.