Even as the option of shopping around for a tailor-made insurance policy for your car looks some months away, you can still search for the best prices in the market. Beginning January, the Insurance Regulatory and Development Authority freed motor, fire and engineering insurance from all price controls. This means more bargaining power for you when you go to the insurance company.
Says Mahavir Chopra, director (e-business) of insurance portal Insurancemall.in: “Currently, the market is in such a frenzy to grab a larger pie that there are no strict rack rates. If you bargain right, you can further reduce the premium rates.”
Changing gear
Post-detariffing also what you pay as premium remains a function of the geographical location, age of the vehicle, model, and manufacturer. But now there is a fifth head—the past claim ratio of the car model is also being considered to slip in discounts. Says Eswaranatarajan N., head, motor insurance, ICICI Lombard General Insurance, the largest private sector general insurance company in India: “Depending on the history, we give discount on models which have a lower claim ratio. We are currently offering around 40% discount on premiums.”
Still in the workshop
The motor insurance industry is, however, still grappling with data to further categorize the discounts on the basis of individual claim experience. Till they finalize their lists, here is your chance to shop for the best possible price. Keep these pointers in mind before you settle for a discount.
Bargain toolkit
• If you are buying directly from the insurer, bargain for the best possible price. Typically, insurance companies keep a margin on their rack rates which gives you enough room for negotiation. “There is usually a margin of 5% so that premiums can be negotiated further and if the customer approaches us directly we are able to offer more discounts as we can cut intermediary cost,” says Vijay Mehrotra, head (retail), Iffco-Tokio General Insurance Co. Ltd.
• Go to different brokers before buying a policy. Brokers have tie-ups with a number of insurers while an agent represents just one insurer. Rahul Aggarwal, CEO of Delhi-based Optima Insurance Brokers, says: “Large broking houses have attractive deals with the insurers. Also, since they represent the interest of the clients, they come in handy when a claim needs to be serviced.”
• Don’t compromise on cover for a discount. A discount might mean a cover less here or there. Always ask for what covers you will get.
A comprehensive policy covers theft or damage to your car, third-party liability as well as the passengers of the car. The cost of covering the passengers and a paid driver comes to around Rs250, and is optional. Don’t ignore this cover for a discount, especially as the cost is low.
• Get your car insured on a full Insured Declared Value (IDV). IDV is the amount that the insurance company would pay you if your car got completely damaged or stolen. Higher discounts might mean a lower IDV. So, ask for the exact IDV to get a real idea of the insurance amount.
• Ask the insurer if it has tie-ups with dealers. If the insurer has an arrangement with the dealers of your car model, you can walk out with a cashless claim settlement.
• Look at the co-payment clause. Also known as “excess” in the policy, a co-payment clause makes you bear a portion of the claim.
Higher excess would mean lower premium since you shift some of the risk from the insurers on to yourself. But, if you can’t afford to pay a higher portion of the claim then don’t bump up your excess. Check with your agent to see if the discount in the premium means a higher excess for you.
In the present scenario, you can get many discounts. But, make sure you don’t lose out on essential coverage. Make use of the tools mentioned here to get a smart deal.
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