Motor Insurance Price Hike: Making The Best of The Situation

Insurance companies and policies are regulated by the Insurance Regulatory and Development Authority (IRDA) in India. The non-life insurance premium was increased from April 1, 2017. There is a change in the insurance premium of the comprehensive plan as well as third party plan. However, small cars whose engine size is less than 1000cc were exempted from the price hike. There is a marginal increase in car insurance premium for cars whose engine size is in between 1000 cc and 1500cc. Large vehicles and SUVs will pay the highest insurance premium which will be to the extent of 50%.

Factors that influence motor insurance

There are various factors that will influence the motor insurance premium.

• Driver’s role – The driver will play an important role in increasing or decreasing the premium for vehicle insurance. By driving safely and following the road signs and traffic signs, it is possible to reduce the accidents on the road.
• Claims history – If you claim insurance, you will not be eligible for ‘no claim bonus’ for one year.
• Change in address – if there is change in place, there will be change in the premium as well. The change takes place due to change in the risk parameter. If you are driving on roads where the number of accidents is high as per the statistics, you will pay higher premium.
• Medical conditions – earlier conviction on drunk driving or health-related issue will increase the risk and you will want to pay higher insurance premium.
• Changes by insurance company – The insurance companies will make changes to plans as per the insurance regulator’s directions. With the introduction of new service charges, the insurance premium will increase. With the introduction of GST, the tax on vehicle premium has increased to 18%.

The above factors other than the driver role will affect the insurance premium and it is not possible to avoid those expenses altogether.

Motor insurance

There is no change in motor insurance premium for two wheelers whose engine size is under 75cc. The premium has increased about 16% for two-wheelers whose engine size is in between 75cc and 150cc. The premium has increased to the extent of 40% for two-wheelers with engine size of 150cc and above. 

The premium will be increased on a consistent basis and it is a routine affair. The update will be done based on the rise in various kinds of expenses and the cost of customer support service. The vehicle owners should make a smart decision to overcome the rise in vehicle insurance premium. 

How to choose the motor insurance plan?

If there is hike in insurance premium, you will want to choose motor insurance plan very carefully. Instead of sticking to the current plan, you can go for a new plan from a new insurance company. If you can compare various insurance plans, you can choose the best plan as per your needs without any issues. 

When you go through the multiple features and price comparison chart, it is possible to settle for the best policy very easily. The comparison will help you narrow down the options very quickly. The best motor insurance plan will fit your budget.

Tips to buy best insurance plan

If there is price hike in insurance premium, you can avoid the claim when you are going to incur minor expenses. Even though it will be tempting to claim insurance for minor repairs, you can save lot of money by availing the no claim bonus.

• Renew the policy on time - The policy should be renewed on or before the due date. If you buy the plan after the due date, you will want to pay the higher insurance premium. In some cases, the insurance company will reject the application if it finds that the vehicle’s condition in a bad position upon inspection.
• Diligent driving - The vehicle should be driven very carefully by following the traffic rules. You should be considerate to pedestrians and the right of way should be given to others as per the need. Costly repairs and insurance costs can be avoided by driving the car diligently.
• Impact of GST - Before the implementation of GST, the tax on insurance premium is 15%. Post-GST implementation, the car insurance premium will be taxed at 18%. If you are paying 15% tax on the insurance premium of Rs. 10,000 you will pay tax of Rs 1500. With the implementation of GST, the tax amount will be Rs. 1800.

Conclusion

You should buy the most appropriate insurance plan after comparing various plans. To reduce the insurance cost, you will want to drive the vehicle safely. If you have a small car or two-wheeler, there will not be any change in the insurance premium. However, you should take measures to avoid higher insurance premium by improving your driving and not claiming for minor damages.