Drive your way to cheaper car premiums

The Insurance Regulatory and Development Authority's (Irda) decision to revise third-party insurance premium rates upwards is going to push up your car insurance costs. The new structure for charging third-party insurance premiums will be applicable to all new policies as well as the ones renewed on or after April 25. The move will lead to third-party insurance premium rates for private vehicles and two wheelers going up by up to 10%. What's more, the insurance regulator has also stated that henceforth, the premiums are to be reviewed and adjusted annually based on formula that has been arrived at. This formula takes into account parameters like average claims cost as well as the frequency of claims for each class of vehicle and cost inflation index for the year of review.

However, the insurers will have to honour the existing annual contracts in their current form till they expire. That is, if you have bought a new policy or renewed the existing one say in December 2010, you will not have to shell out additional premium as per the new schedule of charges. Since third-party liability cover is mandatory - even before a vehicle makes its way from the showroom to the road -you need to buy the cover and there's little you can do to reduce the premium, given the regulated charge structure. Then, if you are buying a comprehensive motor insurance policy, there are other customary parameters that come into play. These include age of the vehicle, price, engine capacity and the geographical zone, on which you have limited control. However, there are several other measures you can take to make sure that your total car insurance bill stays within manageable limits.