Mistakes That Can Make You Pay More for Car Insurance

Many people find themselves in a situation where they look to be paying more for their car insurance plans than required. It is caused due to some wrong decisions they make during the purchase or renewal of the policy. As per the industry experts, the cost of car insurance should be around 1-2% of the car’s value, but if your car insurance cost is going higher than that, then you can look through a few factors that could be affecting your premium. 

Mistakes That Can Make You Pay More for Car Insurance

Let’s dig into the factors due to which you may have to pay for car insurance:

1. Uninformed Decision About Car Insurance

Many people think that only a third-party insurance plan is enough to purchase. But, they fail to assess the importance of comprehensive car insurance which comes with coverage for your car to secure it against uncertain incidents in addition to compensating third-party liabilities. Also, the comprehensive car insurance plan allows you to customize the policy based on your requirements with add-on covers. People buying both third party and standalone own-damage car insurance may have to pay more premium. Hence, it is crucial to make informed decisions about car insurance.

2. Buying Extra Add-on Covers

When it comes to buying add-on covers, many people make the mistake of adding extra add-on covers than required. It certainly enhances the coverage but also leads to expensive renewal with overbuying of rider or add-on covers. Therefore, you should determine which additional cover could be the most suitable as per your requirements and habits. Moreover, it is recommended to avoid purchasing zero depreciation cover, invoice protection cover, roadside assistance cover, etc., for cars of more than 5 years of age as the insurance policy would not provide a desirable coverage.

3. Underestimating Anti-Theft Device

In this era of technological advancement, many people underestimate the significance of anti-theft devices in their cars which could help you save your car from getting stolen. However, there is an add-on cover available with a comprehensive car insurance policy known as Theft Cover, which can help you compensate your expense if your car gets stolen. It will provide you coverage but will increase your premium. To avoid this additonal premium, you can install an anti-theft device in your car which will not just help you secure your car but your insurer will also reward you in terms of a discount on your policy that will help you save money too.

You may also like to read:- Cashless Car Insurance Process Explained 

4. Bad Insurance Claim History

Some people tend to raise a claim for every single damage repair which could lead to a decrease in the amount of claim. When you own a comprehensive car insurance policy, it is always useful to make a claim in severe cases only. If you avoid making a claim in a policy year, the insurance company will give you a discount on the premium during the policy renewal in terms of the No Claim Bonus (NCB) benefit. The NCB increases with every claim-free year from 20% to accumulate a maximum of up to 50%. But, you raise even a small claim, it will terminate your NCB benefit. Hence, you should raise claims and create your claim history wisely.

5. Setting the Wrong IDV

Insured Declared Value (IDV) refers to the current market value of the insured car which is an important factor that determine the amount of premium for your car insurance policy. The insurance provider asks policyholders to set the IDV of the insured car so they can compute the risk to determine the cost of the premium. It is generally suggested to set the IDV of the car equals to the current market value of the car which gives you the right premium cost. Selection of a higher IDV can be expensive, while a lower IDV can get you a lower claim amount in the case of damage or loss.

Also Read:- What Are The Factors Considered By Car Insurance Company To Determine Premium?  

Conclusion 

People should purchase a policy based on the premium they can afford. Also, they should make informed decisions to avoid paying the additional premium costs at the time of policy renewal. On this note, we have tried to put some points due to which you might have to pay more for your car insurance policy and avoiding such mistakes will be economical for you.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.