How to lower your motor insurance premium? — Third party, comprehensive and pay-as-you-drive policy explained

How to lower your motor insurance premium: Motor insurance is absolutely necessary if you own and drive a vehicle in India. It provides financial protection against unfortunate incidents such as accidents, theft, and damages, and not having a insurance attracts hefty challans and fines as well. However, the rising costs of premiums can strain your budget. Fortunately, there are some tips you can follow to save on motor insurance premium.

How to lower your motor insurance premium: Do your research

Firstly, you must research on online insurance comparison portals to obtain multiple quotes easily and compare them based on coverage, premium rates, and add-on features. 

How to lower your motor insurance premium: Opt for deductibles

You can opt for voluntary deductibles where you agree to bear in the event of an accident or claim, and lower your premium in the process. 

How to lower your motor insurance premium: Opt for a pay as your drive policy

In case do not drive your car a lot, then there is one more way you can save on your insurance premium. Insurers offer pay-as-you-drive motor insurance policies for those who do not drive their vehicles a lot. 

In this type of insurance policy, the premiums are based on the usage of the vehicle. It offers flexibility and customisation as the premium is determined by factors such as the coverage taken, driving habits, the pricing structure of the insurer, and the kilometres that the vehicle is driven.

How to lower your motor insurance premium: How does pay as your drive policy work?

Vehicle insurance coverage largely involves two components - the mandatory third party plan, and optional comprehensive plan.

Third party plan: It covers injuries to third parties (othr drivers ion the road, bystanders, etc) and damages to their property caused by the insured vehicle. 

Comprehensive plan: The optional comprehensive plan — which is considerably more expensive than third party — but offers a lot more coverage and security in case of an accident. 

But, as far as pay-as-you-drive policy is concerned, the third party premium is fixed and the premium for the comprehensive coverage (damages incurred to the vehicle or the driver) is based on coverage plan you opt for.
 
For example, some insurers offer as much as a 25% discount for covering vehicles that are driven less than 10,000 km in a year. Another insurer allows the policy holder to opt out of own damage cover when they are not behind the wheel and save on the premium.

What are types of pay as you drive policies? 

One can opt for a policy based on the distance they drive, on their behaviour, or buy a hybrid policy. 

Distance-based policy: As the name suggests, the coverage and premium for the distance-based policy depends on the distance that the vehicle is driven and is suitable for those who use their vehicles rarely or for short distances only. 

Behaviour-based policy: As far as the behaviour-based policies is concerned, it relies on telematics devices that are installed on the vehicle to track the driving behavior like speed, acceleration, and braking of the driver and the premium is calculated according to how safely the driver drives their vehicle.

Hybrid policy: The hybrid policy utilises both the coverage as well as driving behaviour of the policy-holder to calculate the premium.

How to buy the pay as you drive policy?

a) Information required: The information that the policybuyer needs to provide while buying the policy includes details of the current odometer reading of the car, apart from the usual consent form, KYC details and other documents required by the insurer.

b) Declare odometer reading: The premium for a Comprehensive Car Insurance Policy will be the same whether the car drives 50,000 kilometres or it covers just 10 kilometres during the insurance period. However, usage matters in case of a distance-based policy, hence the user has to declare the odometer reading. 

c) Select distance to travel: The insurance buyer has to select ‘distance to be travelled’, speculating how much distance they will drive their insured vehicle and pay the corresponding premium. 

d) Install Telematics Device: The policybuyer may also be asked to install a Telematics Device in their vehicle to track distance driven and analytical data.  

So, before buying or renewing your vehicle's insurance policy. you must remember to research on comparison portals, opt for deductibles or choose the pay as you drive option to significantly reduce your insurance expenses. But always remember that it's essential to strike a balance between premium savings and adequate coverage, ensuring you have adequate financial protection on the road.