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March 30, 2016 11:57

While insurance is a statutory requirement for driving a vehicle on the streets, there’s still a sizeable number of cars in India that continue to be used with an expired insurance. This doesn’t just endanger their own lives, but also the lives of their fellow motorists.

Car insurance companies have been working in tandem with the traffic department to stem this rot. They’re using multiple options to get owners to comply with the requirements, including making periodic announcements on the need for the vehicle to be insured before getting it on the road.

Even among the owners that have complied with government regulations, there’s a large number of people who continue to be struggle with the basics, such as how their car insurance premium has been calculated. They simply continue to sign away the cheques when their coverage is due for renewal, risking the chances of being overcharged, or worse, being under-insured.

The IDV or the insured declared value is the first thing that you should understand in your policy. It is the amount that the insurer agrees to pay in the event of a total-loss of the vehicle. There are quite a few cars in India however, with cocky owners who are willing to take the shortcut of a lower premium for a reduced IDV. A shameful practice that must be eradicated at the earliest.

The car insurance premium is calculated on the basis of the cubic capacity of the motor under the hood. Without going into the exact, individual calculations, the general thumb rule is that the premium increases as the engine capacity rises. Now you know what engine option to choose on the next new car you buy.

The No-Claim Bonus (NCB) is a special friend of those applying for motor insurance. While car insurance companies typically adjust the NCB at the time of policy renewal, there’s still one area where people continue to miss out on the benefits.

Most car owners fail to realize that the No-Claim Bonus can be transferred to their new car purchase, even as they sell their previous car to another buyer. Moreover, the insurance premium is at the highest in the first year and subsequently goes lower. So car buyers can save a neat sum through the NCB transfer. Plus, the savings go up progressively with every jump in vehicle category. For example, the NCB benefits would be higher if the owner is upgrading from a small hatch to a premium, luxury sedan, than if, they were to upgrade to a larger hatch or compact sedan instead.

An eye for detail & an inquisitive mind are often what’s needed to help save some money on car insurance. So the next time your policy comes up for renewal, do keep the above discussion in mind!

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