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The motor insurance industry has seen a series of changes in the last few years. Until 2007, motor insurers looked at basic parameters such as engine capacity, geographical zone, age and price of the vehicle to fix premium rates. That, however, has evolved into a lot more.
In order to decide your insurance premium, insurers today seek other details too. Variables of the vehicle such as age, make and model, usage and capacity; Driver's profile such as age, gender, and occupation; place of parking, area of use of the vehicle, among other things, are being increasingly considered when deciding the insurance premium.
Other variables that contribute towards the estimation of the price are fuel, policyholder vintage with the company, marital status, claims history and kilometres used.
These additional details help insurers to evaluate risk better, and that will make it easier for them to fix prices based on the customer's profile. People providing additional information may end up paying a lower premium than they would have paid otherwise.
Unfortunately, not providing sufficient information can act as a disadvantage. Providing details as simple as marital status, model of car can ensure that the policy is priced effectively.
That said, even within the limited information provided or available, there are opportunities for policyholders to get more value for premium paid. Look at the following factors to do this:
Check your No-Claim-Bonus (NCB) status and ensure that you get the correct NCB on your car's renewal. Even if you are buying a new car, you can transfer the NCB accrued from your old car on the newly purchased car's insurance policy provided you have sold the old vehicle.
Check your car's insurance value or Insured's Declared Value (IDV). It should approximately reflect the resale price of your car at the time of insurance.
Make sure you buy the add-on covers that you want rather than what is forced by your distributor.
Some insurers such as Bajaj Allianz provide additional discounts to customers on providing some extra information when they buy policies on their Web site.
Customers who are confident of their safe driving abilities or have safe driving habits can opt for higher deductible beyond the compulsory deductible of Rs 500 for 1,500-cc cars or below and Rs 1,000 for above 1,500-cc cars.
Higher voluntary deductible can earn discounts of 20 per cent to 35 per cent of OD premium subject to a maximum of Rs 750 to Rs 2,500. The voluntary deductible can be chosen from a minimum of Rs 2,500 to a maximum of Rs 15,000. These would be added to the appropriate compulsory deductibles.
The variables used to arrive at premium rates will only multiply in the coming years as data collection becomes easier.
Customers who are willing to provide more information will benefit with reduced premiums while others will pay the average or higher price.
Providing simple details such as marital status and model of car can ensure that the policy is priced effectively
(The author is Head-Motor Insurance, Bajaj Allianz General Insurance)
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