How to Reduce Car Insurance Premium?

Reducing car insurance premiums is simple and straightforward. By understanding the factors that affect car insurance premiums and applying some strategies, you can significantly reduce your car insurance premium without compromising on the coverage you need. In this article, we will explore some tips to reduce car insurance premiums while ensuring maximum protection.

Read more

Factors that Affect Car Insurance Premiums

Car insurance companies evaluate several factors to assess the risks associated with your vehicle. The higher the risk, the more its insurance premium. Here are the key aspects that impact car insurance premiums:

• Age of the Car: Older cars have a higher probability of giving trouble than brand-new cars. Hence, car insurance premiums shoot up with an increase in the age of the car.
• Make & Model of the Car: Expensive or high-end car models are a greater liability for an insurer. This is because the cost of repairing or replacing its parts is higher in luxury or high-end cars. Thus, car insurance premiums are higher for luxury or high-end cars.
• Type of Coverage: Comprehensive insurance provides greater coverage to a car than third party insurance. As a result, the cost of car insurance is higher in the case of comprehensive coverage.
• Engine Capacity of the Car: Cars with greater engine capacity pose a higher level of risk to the insurer. Therefore, the car insurance price is more for cars with a higher engine capacity.
• Registration Location: The probability of a car getting damaged is higher in certain places, such as densely populated cities, mountains, urban areas, places with a higher record of crimes, etc. Hence, if you reside in such areas, your car insurance premium will be higher.
• Claim History: People with a poor claim history are considered a greater liability by car insurers. Besides, not making any claims in the past year helps the car owner to earn No Claim Bonus (NCB), which reduces their car insurance premiums. Thus, if you have a poor claim history, you need to spend more on your car insurance premium.
• Car Modifications: If you have made any modifications to your car, you may incur a greater loss in case of vehicle damage. Hence, a car with modifications attracts a higher car insurance premium.

10 Tips to Lower Your Car Insurance Premium

1. Compare Car Insurance Online

   One of the easiest ways to save on your insurance costs is to compare car insurance rates from multiple insurers. Different companies evaluate risk factors differently, resulting in varied premium quotes for the same individual. You can use online comparison tools on websites like Policybazaar.com, which allows you to compare car insurance online from several insurers in minutes.

2. Opt for a Bundled Policy

   Many insurers offer discounts if you bundle multiple policies, such as home and car insurance. This not only simplifies your billing but can also save you a significant amount of money.

3. Maintain a Clean Driving Record

   Your driving history is one of the most critical factors influencing your car insurance premium. A history free of accidents, traffic violations, and claims will generally result in lower car insurance rates.

4. Choose a Higher Deductible

   The deductible is the amount you pay out of pocket before your car insurance coverage kicks in. Opting for a higher deductible can lower your annual premium.

5. Improve Your Credit Score

   Insurers also consider your credit score as a factor when determining your car insurance premium. A higher credit score typically leads to lower insurance rates.

6. Ask for Discounts

   Insurers offer a variety of discounts, such as good driving discounts, military or veteran discounts, safety features discounts, etc. This can help you save on your car insurance premium.

7. Review Your Coverage Annually

   Your insurance requirements may change over time, so it's essential to review your policy regularly. If you have an older car, consider dropping comprehensive coverage if its cost exceeds your car's value.

8. Install an Anti-Theft Device

   Vehicles equipped with safety and anti-theft features are less risky to insure, often leading to discounts.

9. Consider Pay-as-you-Drive Insurance (PAYD)

   PAYD or Usage Based Insurance (UBI) charges premiums based on the total number of kilometres you drive your car. The less you drive, the lower is your car insurance premium. Hence, if you drive your car occasionally, you can reduce your car insurance premium by opting for PAYD insurance.

10. Ask About Group Discounts

    Some organizations, employers, or alumni associations provide group discounts on car insurance. So, you can check with your employer or take membership in certain groups to qualify for special car insurance rates.