Our instinct to get the maximum bang from the buck is particularly visible when it comes to buying car insurance, because if one does not make a claim, one does not get any value for the premium paid. By negotiating a policy with a lower premium, one can cut losses. Fortunately, discounts on motor insurance are easy to come by. According to industry officials, in addition to the no claim bonus (NCB), one can get 50-60% discount on the basic vehicle premium.

Naturally, we negotiate hard. However, motor insurance buyers need to be cautious, particularly when the insurer agrees to the discount you are seeking. "Misselling of the insurance product and miscommunication about it are most likely to happen when you are given huge discounts," says Yashish Dahiya of policybazaar.com.

Has your car's value been lowered?

Misselling happens when you buy a policy via an insurance agent. "If you negotiate hard with an agent, he may lower the value of your car, hence lower your insured declared value (IDV)," says Deepak Yohannan of MyInsuranceclub.com. Say your car is valued at Rs 7 lakh and you are asked to pay a premium of Rs 22,000. If you push for a bargain, the agent might value your car at Rs 6.50 lakh, thus bringing your premium down by some Rs 2,000. Unfortunately, you will discover this only when you make a claim, and get a low payout. "At the time of the claim, you will get a lower amount as your car was given a lesser cover (in accordance with the IDV) when it was insured," explains Yohannan. Do check with your agent about your car's IDV.

Has voluntary deductible been increased?

When monetary loss is borne by the insured, it is called deductible. It can be compulsory or voluntary. For a policy where a car's IDV is around Rs 6.50 lakh and an insurer offers a lower premium of Rs 18,930, you are also offered a voluntary deductible component of around Rs 5,000. If you increase the voluntary deductible component to, say, Rs 7,500, the premium gets lowered to Rs 18,480. If you increase it to Rs 15,000 your premium could fall to Rs 18,000.

Often agents lower the premium quote by increasing the voluntary deductible. When a loss occurs, you have to cough up a good amount—voluntary and compulsory deductible— from your pocket.

Incorrect claim history?

If you want to shift to another insurer, and you do not disclose that you had made a claim with your previous insurer, you may get a discounted premium from your new insurer. The problem arises when you make a claim with your new insurer.

The company will contact your previous insurer to verify your claim history. "If nondisclosure or misrepresentation on the part of a policyholder is found out at the time of a claim, the insurance company has the right to reject the claim," says Dahiya. While agents are quick to suggest such tricks to policy buyers—who often agree—it is the buyer who suffers when his claim gets rejected.

Have add-on covers been removed?

"At times, premiums are lowered after removing add-on covers from the base policy," says Divya Gandhi, Head, General Insurance and Principal Officer, Emkay Insurance Brokers. So, first the agent will show a quote with the cost of add-on covers factored in.

And when you bargain, the agent will remove the cost of add-on covers to offer a lower quote. "A typical third-party motor policy has in-built covers for drivers and passengers.

These are detachable, and so often people choose not to take these covers in order to lower the premium payout," says Sanjay Datta, Chief Underwriting and Claims, ICICI Lombard General Insurance. Add-on cover can be important, don't get swayed by the lower premium.

Standard cover pitched as special offer?

Often agents sell a policy by bloating its price and then offering you a 20-30% discount on the premium and project it as a special deal for you. Or, they include an add-on cover and say that despite an additional benefit they have been able to keep the premium unchanged.And even though the premium would have increased, you would not know the premium stripped of the add-on covers. So, if you can do a little research of your own before you buy the policy, it will be helpful.
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