How to cut your motor insurance premium

Third-party premium can't be reduced but own damage can be brought down with a little effort

Buying a white car instead of a black or red one could reduce your car insurance premium by up to 25 per cent. Surprised? It’s true. A white-coloured vehicle is considered safer, since it can be spotted more clearly on a dark road than a dark-coloured vehicle. So, collissions are likely to be fewer. A few other tips like this can help cut car insurance premium costs when these go up from April this year.

With the Insurance Regulatory and Development Authority (Irda) proposing a steep rise in insurance premium for both cars (25-130 per cent) and two-wheelers (up to 45 per cent), vehicle owners and buyers need to be careful about certain things to save costs.

While it is compulsory to buy third-party insurance cover, saving costs on own damage can help substantially, besides choosing the right colour and reducing certain add-on covers. For instance, some customers buy covers only for fire and theft, or either of the two along with a third-party cover, says Madhukar Sinha, national head, personal lines, Tata AIG General Insurance.

Of course, truncated policies mean reduced covers but if you are a safe driver, you can take some liberty. Another important step you can take is buying the first year’s insurance cover from someone other than the car dealer. You might get a better deal from others. Some insurance companies use parameters such as colour, age and profession of driver, diesel or petrol and anti-theft mechanisms(saving of Rs 500) to lower the premium. Insurers assume a diesel vehicle will be used more. “So, if you have a diesel vehicle, you can choose an insurer that does not differentiate between diesel or petrol vehicles. On the other hand, if you have a petrol vehicle, you can  go for an insurer that does differentiate on that basis as you will get better rates,’’ says Yashish Dahiya of Policybazaar.com. For instance, the difference in premium for a diesel and petrol car can be as high as 25 per cent, in favour of petrol cars.

Similarly, people of certain professions such as doctors, lawyers and army officers have historically commanded lower premiums because they tend to maintain their vehicles better and their usage is often restricted from home to the workplace.

A person with a driving experience of over 20 years can also get 15-20 per cent lower premium. For instance, a 21-year old could be charged a higher premium than his or her parent, who at 40-45 years of age is considered to have sufficient driving experience.

Being a member of an automobile association or club also helps, as it is assumed that such people are safe drivers since they can become members of such clubs only if they have sound technical knowledge, adds Sinha.

Customers can also look at 'voluntary excess’, which is the option to pay a certain amount of the claim (say, 20-35 per cent of the claim) from their own pocket. If you use your car a lot, then chances are the company will charge a higher premium, assuming that your claims will be high. In such a case, opting for voluntary excess is a good idea.

The biggest way to save on your premium costs is to keep your claims down, as then you will get the benefit of the no-claim bonus. So, you have to decide which expenses are worth claiming and which are not.