Lower Car Insurance Premium: 7 Smart Ways to Save

Posted on: Jun 12, 2025 | 4 mins | Written by: HDFC ERGO Team

Lower Car Insurance Premium: 7 Smart Ways to Save

Every driver wants a lower car insurance premium. But most people think wrongly that lowering the price also means taking away essential safety features. The good news? If you know what to do, you can keep your security strong while spending much less.

Car insurance policy rates depend on many factors, such as your car's value, past claims, how you drive, and even where you park at night. You can beat the rating system instead of taking the first quote you see if you know which buttons you can legally and safely pull.

These seven realistic, law-abiding tips will help you save money without being open to costly risks.

● Tip 1: Increase Voluntary Deductible

If you choose a bigger deductible, you are taking on a little more risk than the insurance company. Also, insurance companies reward that loyalty with significant savings on the premium's own damage (OD) part. A ₹5,000 deductible, for instance, can reduce car insurance costs in India by about 25% on OD rates. If you pay a ₹15,000 deductible, the savings can go up to 35%, but only up to the limits set by IRDAI.

At a glance:

● ₹2,500 deductible: up to 20% OD discount (max ₹750)

● ₹5,000 deductible: up to 25% OD discount (max ₹1,500)

● ₹7,500 deductible: up to 30% OD discount (max ₹2,000)

● ₹15,000 deductible: up to 35% OD discount (max ₹2,500)

Before you pick an amount, make sure that it will still be possible for you to pay if you need to file a claim. You lose the savings if you can't pay your share after an accident.

● Tip 2: Utilise No Claim Bonus (NCB)

Keeping a claim-free record leads to a discount that builds over time and can reach 50% after five claim-free extensions in a row. If you add on No Claim Bonus protection, you can keep that hard-earned slab even if you make one small claim in an insurance year.

The NCB price ladder looks like this:

● Year 1: 20%

● Year 2: 25%

● Year 3: 35%

● Year 4: 45%

● Year 5: 50%

NCB follows you, not your car. So, if you renew within 90 days, you can take the amount you've saved to a new car or insurance company. Remember that the ladder starts over at zero after any more than three months' break. If you keep it, your premiums will stay very low year after year.

● Tip 3: Install Anti-Theft Devices

An immobiliser, alarm, or GPS tag approved by the Automotive Research Association of India (ARAI) should be put in your car. Because it makes theft less likely, it quickly results in a lower car insurance premium.

Once you show them the installation proof, insurers usually give you a 2.5% discount on the OD part, up to ₹500. In addition to device-specific discounts, many insurance companies also include these devices in larger car insurance discounts.

These give you discounts on grouped "safety features" and put your car in a lower-risk category. These are the kinds of gadgets that count:

● Motor vehicle immobilisers

● Central locking methods that sound an alarm

● Telematics trackers that use GPS

● Official ARAI-approved wheel-lock nuts and steering column locks

Keep your bill and the proof of fitting; most insurance companies will ask for copies when you renew your policy to keep the discount.

● Tip 4: Choose Add-ons Wisely

Zero depreciation, engine protection, consumables, and backup help are all add-ons that can save your life. But getting every rider without thinking about it raises rates. Without sacrificing essential safety features, smart trimming can reduce car insurance costs in India. Right-size riders by doing a check once a year before each renewal.

● Keep zero depreciation if your car is less than five years old or has expensive metal parts. It pays back the full value of the part, so you don't have to pay a lot of money for fixes.

● If the roads are well-paved and don't flood, don't use an engine guard. It's essential in rainy belts but not necessary in dry areas.

● If you often drive late at night or on long highway trips, get roadside help. Towing, repairs, and emergency fuel can get you to any location.

● Merge personal accident coverage from life, health, and car insurance. A single cap is enough to keep premiums from going up three times for the same benefits.

If your car's insurance runs out and small repair parts become cheap in aftermarket shops, you should not get coverage for replacements.

● Tip 5: Avoid Small Claims

It makes sense to file a claim for every ding or scratch on the car, but doing so quietly raises your premiums the following year and eats away at your long-term savings. That's not what insurance is for; it's a safety net against big cash shocks.

● Preserve No-Claim Bonuses: Small fixes paid for out-of-pocket protection discounts built up over the years, saving a lot more than the claim would pay back.

● Maintain a Favourable Claims Ratio: When you make a lot of claims, insurers see you as high risk and charge you more or raise your deductible when your policy renews.

● Skip Deductible-Sized Repairs: If the cost of repairs is the same as or just above your deductible, filing a claim won't help much and will cost you savings.

● Quick, Affordable Fixes: Most of the time, local body shops or cashless reward programs can fix cosmetic damage faster and for less money than filing an official claim.

● Tip 6: Compare Quotes Regularly

Different insurers use different formulas to set premiums. What one company calls "high risk," another may pursue actively. Online comparisons once a year can show rates up to 40% lower for the same coverage. As a result, one of the best cheap car insurance tips is to shop side-by-side.

● To avoid "last-minute" charges, ask for quotes at least 30 days before the renewal.

● Use the same IDV (Insured Declared Value) to compare like with like.

● Re-enter correct information about the car, driver, and usage; even small mistakes can throw off the findings.

● Tip 7: Maintain a Good Driving Record

Traffic breaches and the number of accidents directly affect how much a premium is. Years without an accident or ticket can help you get safe-driver refunds and loyalty car insurance discounts that can add up to the same amount over time as NCB percentages.

"Pay-how-you-drive" deals that use telematics make these saves even bigger. Staying within the speed limit, not slamming on the brakes, and putting in fewer miles each year can lead to double-digit premium cuts. Many insurance companies also send you driving record reports regularly that you can use to help you improve your driving.

Conclusion

By changing factors, you can change premiums, claim behaviour, safety devices, and shopping habits. You can save a lot of money without cutting back on essential safety measures. A small extra like No Claim Bonus protection can even pay for itself by letting you keep a 50% prize after a minor accident. Use these methods immediately, and the math will work well.

Want to understand how third-party insurance steps in when property damage claims arise? Read our guide on How Third Party Car Insurance Handles Claims for Property Damage? to complete your insurance knowledge.

FAQs

1. Can plans that use trackers work with other cheap car insurance tips to save even more money?

Yes. It is possible to get personalised discounts with usage-based plans, which add discounts on top of comparison and limits to get the biggest total discount without cutting cover.

2. How often should I change my car's Insured Declared Value (IDV)?

Look over IDV once a year. Setting it a little below market value will lower your premium, but ensure it still shows how much your car is worth when making a claim.

3. Does making changes that improve speed void standard coverage?

Not instantly, but the insurance company needs to be told. Unreported changes to the engine or suspension can make claims useless. Some insurers charge extra fees or don't cover losses linked to racing.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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