7 ways your car insurance premium may increase and tips to save on premiums

Car insurance premiums can fluctuate for various reasons, often leading to unexpected increases that strain your budget. Understanding the factors that contribute to these hikes is crucial for managing your car insurance effectively. This article explores seven common reasons why your car insurance premiums might increase and offers practical tips to help you save money. Whether you have a standard or comprehensive car insurance policy, these insights will help you stay ahead of rising costs.

1. Claims history

Frequent claims

Making frequent claims, even for minor damages, can result in higher premiums. Insurance companies view frequent claims as a sign of increased risk and adjust premiums accordingly.

How to save

Avoid filing claims for small repairs that you can afford out-of-pocket. Reserve your insurance for major incidents to keep your claims history clean and your premiums lower.

2. Changes in your driving record

Traffic violations

Accumulating traffic violations can significantly impact your car insurance premium. These violations indicate risky driving behaviour, prompting insurers to raise rates.

How to save

Maintain a clean driving record by adhering to traffic laws and practising safe driving habits.

3. Location

High-risk areas

Living in an area with high crime rates, heavy traffic, or frequent natural disasters can increase your car insurance premium. These factors elevate the risk of theft, accidents, and damage.

How to save

While relocating might not be feasible, you can take steps to mitigate risks, such as parking your car in a secure garage or using anti-theft devices. These measures can help lower your premium by reducing the risk of damage or theft.

4. Type of coverage and add-ons

Comprehensive car insurance

Opting for comprehensive car insurance provides extensive coverage but comes with higher premiums. Additional add-ons like zero depreciation cover, roadside assistance, and engine protection further increase costs.

How to save

Review your policy regularly and assess the necessity of each add-on. Remove any coverage that you no longer need or can afford to do without. Balancing adequate protection with affordability is key.

5. Vehicle's make and model

High-end and luxury cars

Luxury and high-performance vehicles attract higher insurance premiums due to the expensive repairs and replacement parts they require.

How to save

If you're considering purchasing a new car, factor in the insurance costs associated with different makes and models. Choosing a vehicle with a lower insurance bracket can result in significant savings on your premium.

6. Inflation and rising costs

Economic factors

Inflation and rising costs of vehicle repairs, parts, and labour directly affect car insurance premiums. As the cost of these services increases, insurers adjust premiums to cover the higher expenses.

How to save

Stay informed about market trends and regularly compare car insurance quotes from different providers. Switching to a more competitive insurer can help you find better rates and avoid overpaying.

7. Policy lapses

Gaps in coverage

Allowing your car insurance policy to lapse, even briefly, can lead to higher premiums when you renew or purchase a new policy. Insurers view gaps in coverage as a sign of financial instability or negligence.

How to save

Set reminders for policy renewal dates and ensure timely payments to maintain continuous coverage. Consider setting up automatic payments to avoid accidental lapses.

Additional tips for saving on car insurance

Utilise No Claim Bonus (NCB)

If you haven’t made any claims during your policy period, you are entitled to a No Claim Bonus (NCB). This bonus can significantly reduce your premium in subsequent years. Make sure to utilise your NCB when renewing your policy.

Install safety features

Equipping your car with safety features such as anti-theft devices and other security features can lower your car insurance premium. Insurers often offer discounts for cars that have enhanced safety measures, as these reduce the risk of theft and damages due to accidents.

Conclusion

Car insurance premiums can rise for various reasons, from changes in your driving record to economic factors like inflation. Understanding these factors allows you to take proactive steps to manage and reduce your costs. Whether you hold a standard policy or comprehensive car insurance, employing the tips provided can help you save money and maintain optimal coverage. Stay informed, regularly review your policy, and compare options to ensure you get the best deal possible.

Disclaimer: *T&C Apply - Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third-party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Limited, ICICI Lombard General Insurance Company Limited, HDFC ERGO General Insurance Company Limited, Tata AIG General Insurance Company Limited, The New India Assurance Company Limited, Cholamandalam MS General Insurance Company Limited, Niva Bupa Health Insurance Company Limited , Aditya Birla Health Insurance Company Limited, Manipal Cigna Health Insurance Company Limited and Care Health Insurance Company Limited under the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer's website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. Tax benefits applicable if any, will be as per the prevailing tax laws. Tax laws are subject to change. Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services. Please consult your advisors before proceeding to purchase an insurance product. URN No. BFL/Advt./23-24/360