Pay a lower car insurance premium if you are married

Pay a lower car insurance premium if you are married

Factors like profession, gender and marital status, among many others, are now being used by insurers to determine the premium. ET shows how you can bring down your auto insurance premiums

Are you a doctor? Do you have a covered parking lot? Do you use your car sparingly? If your answers to these questions are yes, you may get a discount on the insurance premium on your car at the time of renewal. Faced with huge losses in their motor portfolio, general insurers are exploring various options to reduce the losses. Differential pricing is one of the options considered, which means premiums will go up if the insurer believes the incidence of claim is going to be higher or vice versa.

"Traditionally, car premiums were decided upon the basic factors i.e. engine capacity, age of the car and geographical zones. Over the last four years, insurers in India have started using several other 'asset-based' parameters – such as the type of fuel used in the car, effective anti-theft devices etc. Further, few insurers now are trying with 'demographic' parameters as well – these include the occupation of the insured, the age of the driver/insured etc.," says Sanjay Datta, chief, underwriting & claims, ICICI Lombard.

In fact, industry-watchers say your marital status and gender, too, could affect the premium figures. "In terms of demographic parameters, we have started taking into account the insured's age, gender, occupation and driving experience. Even marital status plays a role in influencing the premiums. For instance, married individuals in the age group of 32-60 are entitled to discounts as they are perceived to be more responsible drivers and we are thinking of using this as a rating parameter. They can also be counted upon to take good care of their vehicles. Discounts on the basis of such personal information can go up to 20%. Likewise, the loading on premium, too, can be as high as 20%," says Madhukar Sinha, national head, personal lines, Tata-AIG General.

However, the possibility of discount in one category being cancelled out due to loading in another cannot be ruled out. For instance, higher premium due to the fuel type may nullify the discount earned on account of occupation or age.

PROVIDE MORE INFORMATION IN THE PROPOSAL FORM

Simply put, the information you provide can swing the premium for you. For instance, Berkshire Insurance, which sells Bajaj Allianz's motor policies, offers a 5% discount to policyholders if they share personal information.

"We have started offering discounts in premiums to certain professions (like doctors, software professionals, those with desk jobs) and also on the basis of income brackets and gender. The discounts will be in the range of 5-7% on policies bought online," says Vijay Kumar, head, motor insurance at Bajaj Allianz.

You are also likely to score high on insurers' preference meter if you sparingly use your vehicle, as that would translate into fewer chances of making claims. This apart, you could be charged lower premiums if you park the car in a covered space. Again, the reason is lower possibility of claims. On the other hand, a car parked in the open is always at the risk of getting damaged.

BUY POLICIES ONLINE

If you are buying your policies through an intermediary, it is unlikely that s/he will encourage you to provide such details in the proposal form. Besides, going online has direct benefits, too. "One can save money on car insurance premiums by buying the insurance policy online. Some companies offer better rates for customers coming directly onto the company's website," says Datta.

PROTECT YOUR NO-CLAIM BONUS

Policyholders who have not made any claims in the previous year receive rewards in the form of noclaim bonus (NCB). On renewal, the cover could increase by up to 50%. Therefore, you need to make efforts to 'earn' this NCB. At a broader level, you can do so by following driving rules and taking adequate care of your car. Moreover, you can also retain the NCB by forgoing smaller claims.

"If the claim amount is not significant, it is better not to make a claim. You should look at getting the vehicle repaired at a garage that charges reasonable rates. You can negotiate hard to bring down the costs. If you avoid smaller claims, you stand to gain 20% in the first year and up to 50% in the subsequent years as NCB," says Kumar. Simply put, if the amount is lower than the NCB you are likely to accumulate, you'd be better off forgoing the claim. Also, remember, since the NCB is linked not to the vehicle or the policy but to the policyholder, it will be transferred to your new car, too.

"You should ensure that when you sell your old car and buy a new car in the same segment, you can claim NCB on the premium for the new car also. The savings in such a scenario can be significant as the premium for a new car is always high."

ASK FOR HIGHER  DEDUCTABLE

If you are confident of your driving abilities or are unlikely to use your car extensively during the year, you can explore this option. Here, the customer agrees to bear a part of the expenses before the company steps in to foot the rest of the bill.

"If the customer is confident of his/her driving skills and feels that s/he is not going to make a claim during the year, this is a good option. The deductible ranges from Rs 2,500 to Rs 7,500 and the savings in premium can be as high as 30%," says Kumar.

CHOOSE YOUR FUEL TYPE WISELY

While diesel cars have gained popularity due to lower cost of the fuel, the effect on premiums is just the opposite. Petrol cars attract lower premiums compared to diesel or CNG-run vehicles. Therefore, you need to bear this point in mind while deciding on the right vehicle.

INSTALL ANTI-THEFT DEVICES

"Further discounts can be availed by installing Automobile Research Association of India (ARAI) approved anti-theft devices in your car. This is another form of reward to the owner of the car for showing responsibility by installing such a device," says Datta. It is estimated that installation of such devices have brought down claims by up to 80%. "At the time of buying a car, ensure that it is fitted with a manufacturer-fitted anti-theft device. Devices procured later may not help much as the insurer will have to assess whether it is certified, which could result in hassles during policy issuance," adds Kumar.Source: Economic Times