The inflation year after year will only make all the possibilities for an increase in an optimum motor insurance plan. It will become expensive to own a car and if there are any damages during an unexpected situation then motor insurance will come to the rescue. If there is an insurance plan it will not only remove the possibility of heavy damages but will also save a lot of money on financial matters.
Here in this article, we discuss a few tips which will help you to reduce your car insurance premium drastically.
- Making the right investment
- Do not make changes to the vehicle
- Insured Declared Value
- Unlapsed car insurance
- Compare insurance plans
- Avoid minor claims
1. Making the right investment
Making the right investment decision in car insurance will always save a lot of your money and also help you to prevent the risk of loss on your car. Making the right investment in security features, locking systems, anti-theft devices will probably reduce the premium on your car insurance. These methods will increase the car security and they will reduce the risk of loss for the insurer.
2. Do not make changes to the vehicle
If you modify the car and make changes to the car by adding additional fittings to the car the insurance company will calculate considering all the devices fitted to the car and give you a high payable amount.
The reason is that if there are any modifications to the original car then the insurer will consider the risk and returns on the parts of the car and increase the premium on the insurance. It is advised to inform the insurer about the amendments to the car this will help you to avoid insurance rejection claims during the event of an incident.
Click here for All about business insurance in the UAE
3. Insured Declared Value
Insured Declared Value is the estimated approximate value of your car. It is also called IDV. It is used to find the estimated value that the insurer is willing to pay during the settlement of the claim. Selecting the correct IDV is very important and there are many different factors like car model, condition of the car, type of the car, present condition of the car and other factors that will affect the car condition which will affect the IDV.
Maintaining the right IDV will ensure that you pay less on the premium. To maintain the right IDV, all it requires is you maintain the car in a good condition and other things will follow. A high IDV will increase the insurance premium and if you set a low IDV then there is a lower premium. The claim amount is paid based on the loss situation.
4. Unlapsed Car insurance
It is important to note that car insurance should not get lapsed and all you have to do is renew the insurance policy at the right time. If you fail to renew then you have to again purchase the insurance. Some insurance companies will provide a facility for paying the penalty and renewing the insurance policy. It is important to renew your insurance policy and it is also important to not lapse your policy.
It is similar to buying an insurance policy as lapsed insurance will lose the benefits and also it will increase the risk. If the risk on insurance increases then the premium amounts will also increase. You will not get benefits from the insurance company such as no claim bonus. Since you will be buying a new insurance policy you may have to miss on getting the no claim bonus. It is suggested that you renew the insurance policy a week prior to the expiry date.
Click here for Why do you need an Insurance broker?
5. Compare insurance policies
It is important that you compare the insurance policies before you purchase them. Factors such as total sum insured amount, premium amounts, advantages of insurance, features of insurance and other benefits. Based on your insurance requirements, write down all your advantages and disadvantages of the insurance policy. These comparisons can be made through the online mode or on the insurance broker website. It is advised to do the insurance research thoroughly prior to making a purchase of an insurance policy. To get the best deal comparison will help to get the right benefits on the insurance.
6. Avoid Minor Claims
Avoiding minor claims on your insurance will reduce the insurance premium. Minor car damages which you can handle go ahead and make the repairs out of your pocket. These are the expenses that are manageable and can be bared.
If you raise a claim for small damages then the No claim bonus will get affected. You can get upto 50% discount over a period of five years with no claims made on your insurance. Handle small and minor claims and decide to go on for heavy claims to the insurance company.
Take away
Car insurance is mandatory in the UAE. Having car insurance is compulsory at all times. The best car insurance in UAE and more secured insurance will always be costly but you can reduce the car insurance premiums by following certain measures which are discussed above. Whenever you are buying insurance or renewing car insurance you should compare the car insurance and you will arrive at the best insurance policy as per your requirements.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
