Motor insurance FAQs on premiums and discounts

Can you claim a bonus on the premium you pay on your motor insurance provided you fulfill certain conditions?

Can you cancel your motor insurance midway and yet claim for refund? Can you pay your premium online or renew your motor insurance policy online?

Here are the answers to frequently asked questions about the costs, premiums, bonus and discounts that you can avail on your motor vehicle insurance.

Are there any discounts offered by the motor insurance company?

Discounts offered on your premiums are dependent on your claims history as well as certain undertakings on your part. Such discounts include:

No Claim Bonus: If you have made no claims on your motor insurance policy in a particular year, the insurance company grants a discount in the premium during policy renewal called a No Claims Bonus. Insurers reward policyholders for not making claims by providing this discount on the Own Damage part of the premium up to a maximum of 50 per cent. That is, if you have made no claim in the first year, you get a bonus of 20 per cent; for two consecutive years, the bonus is 25 per cent; for three consecutive years, it's 35 per cent; for four consecutive years, 45 per cent, and for five consecutive years, the bonus is 50 per cent.

Memberships: If you are a member of a recognised automobile association, you could be eligible for a premium discount. Furthermore, you can avail a discount of up to Rs 500 if you have installed an anti-theft device in your vehicle, approved by the Automotive Research Association of India.

Voluntary Excess: You also receive a discount by opting for voluntary excess, that is, your option to bear a certain amount of loss from each claim. For instance, you had an accident and your claim amount is Rs 10,000. You choose to bear the first Rs 5,000 of your claim. This becomes your voluntary deductible. The claim will now be worth only Rs 5,000. If you opt for such a voluntary deductible, the insurer offers you a discount on your vehicle premium.

And finally there are those informal discounts that you can avail if you are good at negotiating with the insurance company.

Can I cancel my motor insurance and get a refund during the policy period?

Yes, provided you show that your vehicle has been insured elsewhere, or the registration certificate for your vehicle has been legally cancelled by the Regional Transport Office (RTO). Once the policy has been cancelled, the balance of the premium amount will be refunded to you. The refund is possible only if there has been no claim during the policy period. The insurance company will also retain a minimum premium for the time the policy was in force.

Are there any benefits offered if I have made no claims for the last few years?

If you have made no claims on your motor insurance policy in a particular year, the insurance company grants a discount in the premium during policy renewal called a No Claims Bonus.

Insurers reward policyholders for not making claims by providing this discount on the Own Damage part of the premium up to a maximum of 50 per cent. That is, if you have made no claim in the first year, you get a bonus of 20 per cent; for two consecutive years, the bonus is 25 per cent; for three consecutive years, it's 35 per cent; for four consecutive years, 45 per cent, and for five consecutive years, the bonus is 50 per cent. Remember to renew your policy within 90 days of expiry to avail of the No Claims Bonus.

Can I pay the premium for my auto insurance in installments?

No, the Insurance Act, 1938 does not permit you to pay your auto insurance premium in installments.

However, some insurance companies allow you to pay your insurance by credit card. In such cases, you could charge the entire premium to your card, but pay the credit card company in installments.

Can I renew my motor policy online?

Yes, you can renew your policy online, provided it is renewed between the period starting two months before expiry and six days after expiry of the previous policy.

Why does my place of residence affect my premium amount?

The Indian Motor Tariff Act categorizes cities into specific zones, each zone having a different rating factor for premiums. Mentioned below is the zone categorization for private cars and two-wheelers:

Zone A: Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, and Pune
Zone B: Rest of India

Please note that the premium charged depends on the city of registration, irrespective of the place where it is used or where the insurance is renewed.

Are there any special discounts available for handicapped people?

For handicapped persons, a discount of 50 per cent is available on the Own Damage premium -- provided that the vehicle has been modified for use. The discount is also available for institutions exclusively engaged in the service of the handicapped.