How to Lower the Cost of Car Insurance Renewal?

Below are the points to lower the cost of car insurance renewal:

Compare the Renewal Plan from Various Insurers

At the time of renewal, most of the policyholders select the offer from their existing insurers and do not even compare quotes from other insurers. This may often lose out the probability of getting down the price of car insurance renewal.

It is advisable to compare the renewal quote from other insurers as well. There are lots of insurance brokers available online, which offers online service in order to compare competitive plan from various companies, buy and renew their car insurance policy through one user-friendly platform.

This will give you best deal on your policy renewal.

Get the Benefits, Which are Required

Insurers give many attractive additional benefits in the policy coverage, which may cost more money. It is wisest if the customers select only the specific features which they require and eliminate unnecessary cover they don’t consider relevant.

How to Opt for a Safe Insurance Company?

Grab No Claim Bonus (NCB) Benefit

NCB is the greatest benefit, which any policyholder can gain. This bonus is made if the policyholder does not make any claim during the policy period. NCB benefit is gained as a discount on the premium paid at the time of renewal, which increases with every claim-free year.

Opt for Voluntary Deduction

Voluntary Deduction is the amount that policyholders have to pay during claim settlement. If the customers pay a higher amount towards the voluntary deduction part of the policy, they have to pay low premium for a certain time, which will help in saving the cost of insurance renewal.

Do Early Renewal before expire

Some insurance companies set prefix duration to renew the policy. After closing of the date, they raise the renewal cost. Customers have no choice but to accept the higher price.

One best thing customers can do is to start working towards the policy renewal a minimal of one month prior to the schedule renewal date. So that some time is spent in analysing, comparing and opting for best renewal plan at the reasonable price before the current policy lapse. Generally pre-set time for renewal is 30 days in most of the companies.

Get to know more about Motor Insurance

FAQ About “No Claim Bonus”

Though getting Insurance policy for safety purpose has been grown-up, but there is lots of important factors in which people are still confused. This topic is all about the term “No Claim Bonus”. Let’s have a look:

What is “No Claim Bonus”?

No Claim Bonus (NCB) is the benefit added as a profit to the insurance owner for making NIL claims (claim-less year) by the end of the year. This benefit is offered by insurance companies if a policy holder has not made any claim during the term of Insurance Policy.

How do I build a claim? 

If you don’t make any claim during the policy year, you will able to gain No Claim Bonus. For every year, you are insured without making any claim; you will earn this NCB. Owner can use this bonus either for paying the less premium or getting more coverage from next year or can adjust the same at the time of new purchases. Customer should confirm this at the time of purchasing policy.

How will NCB work, if I make a claim?

If you make any claim on your insurance policy for which your insurer pays out, you will lose your No Claim Bonus. However, in case, if you are hit by another person’s car and there is no fault from your side, your insurer may be able to reclaim the pay-out from other owner car insurer and your NCB may not be affected.

Can NCB apply to Work Vehicles?

Generally, NCB is not applicable for commercial policies, but some insurers will take your experience driving a company car into account when calculating your premium. If vehicle is insured for you to use for “Social, Domestic and Pleasure Purpose” as well as for “Work”, you can apply for NCB, but make sure with the insurer at the time of policy purchasing.

When will I get benefit of NCB in Motor insurance?

In motor insurance, if you want to take a benefit of NCB, you have to maintain a claim-free record in the previous year. So you will get discount on policy from next year or on renewal of policy. This discount ranges from 20%-50% on premium paid every year (or as per the insurer policy plan). You can claim NCB of 20% on the first renewal of the completion of policy year. The discount increases steadily with every claim-less year up to a maximum 50% at the end of five claim-less years.
For example, you have taken coverage of Rs. 5, 00,000 Lakhs and your premium is of Rs. 27,000 thousands. If insurer provides 20% discount on first no-claim year, you have to pay Rs. 21,600 (=Rs. 27,000*20%) premium at the time of renewal of policy in next year.

When will I get benefit of NCB in Health insurance?

In Health Insurance, if you don’t make any claim in the insured year, you will get additional NCB discount coverage (than previous coverage in insured year) on renewal of policy in the next year at the same premium. The coverage increases steadily within every claim-less year at the same premium plan.

For example, you have taken coverage of Rs. 5, 00,000 Lakhs and your premium plan is Rs. 27,000 thousands. If insurer provides 20% discount on first no-claim year, you have coverage of Rs. 6, 00,000 (=Rs. 5, 00,000 + (Rs. 5, 00,000*20%)) at the time of renewal of policy in next year at the same premium.

Does NCB belong to me or to my vehicle? Is this NCB bonus transferrable when I replace my old vehicle with new one?

The NCB is the reward given to the policy holder by insurer. In motor insurance, this NCB belongs to policyholder, not to the vehicle. So, it will retain if you replace your existing car with new car or if you switch to another insurer at the time of renewal of the policy. But customer should make sure that NCB belongs to the same type of vehicle, means NCB is beneficiary if you replace car to car or two wheeler to two wheeler.

NCB is not allowed from person-to-person until and unless the other person inherits the car on the policy owner’s death.  Inheritor can decide to go with any insurer. It depends on the Insurer service.

Transferring NCB is very simple process. Customers can easily get NCB transfer. For example, any person owned a car in 2003 and sold it in 2008 after 5 year of claim-less policy completion. So the person has been rewarded by 50% NCB bonus. He has purchased his new car in 2010 with premium Rs. 20,000 (excluding service tax), out of which Rs. 18,000 is the premium for own loss/damage. So the person can transfer the NCB earned on the previous car policy to the new car policy and can claim the NCB bonus on the first premium payable on the new policy. Now the NCB discount is 50% so benefit on premium is Rs. 9,000(=Rs. 18,000*50%). So the customer will pay premium Rs. 11,000 (Rs. 20,000- Rs.9, 000).

How can I transfer my NCB benefit?

 Transfer NCB is a very fair and simple process when you sell your old vehicle and buy new one (replacement of same type vehicle such as car to car or two wheeler to two wheeler). You have to submit the buyer-seller form (forms 29 and 30) along with a requesting letter for NCB transfer to your existing insurer. The insurer will issue an NCB certificate, which is valid for three years, and that will also submit to the new insurer.

In case of changing insurer at the time of policy renewal for your existing vehicle, you only need last year’s policy document/ renewal notice mentioning the eligibility for NCB bonus.

If you buy a policy online, there is no need of NCB certificate. NCB will be transferred based on your declaration. New insurer will cross-verify online with your previous insurer.

Read IRDA Guideline for NCB here.