By Prashant Nimgade · Published · Updated
Most car owners are rate-takers when it comes to car insurance renewal quotes and accept them without comparing. This practice will cost you thousands of rupees annually. The easiest way to reduce car insurance premium costs is by a careful car insurance comparison. With the same insured value, it saves ₹4,189 on one renewal, or approximately 19.5%, in the worked example below.
This guide discusses what really sets your premium. It demonstrates a line-by-line comparison of policies, not just price comparison. It also provides information about errors that result in denied claims. Numbers are all based on the latest rules and news, so you can check for yourself.
Your policy should be reviewed this year due to three recent developments.
1. The Supreme Court is tightening the screws on enforcement. On 4 August 2026, the Supreme Court asked the Centre to implement a pilot scheme in which petrol outlets will not dispense fuel to any vehicle that does not have a valid third-party insurance policy. About 16.54 crore out of the total 30.48 crore registered vehicles in India are without valid insurance, about 56%, the bench has pointed out. It also ordered four years of third-party cover for new cars and six years for new two-wheelers. (Business Standard, Aug 2026)
2. Third-party rates may increase. The government sets third-party premiums, not insurers. In 2025, the road transport ministry and IRDAI were talking of a hike of up to 10% on average, and more for some vehicle types. Today the rate is about ₹2,100 for cars up to 1,000 cc and about ₹3,400 for cars between 1,000 and 1,500 cc. (Business Standard, Jun 2025) Take a look at the latest notification before renewing.
3. Claim disagreements are occurring over specifics. The Delhi State Consumer Commission directed New India Assurance to pay a senior citizen ₹6.92 lakh in October 2026. The insurance company had denied his claim, in part on the grounds that the insured value of the vehicle was excessive for a 15-year-old car. The commission said the insurer had taken the premium at that amount and should have validated it at the time of renewal. Even so, the owner had to wait years for his money. (Outlook Money, Oct 2026)
It's a very simple lesson. It is not sufficient to have a cheap policy. You need the right price and the right details.
There are several components in a comprehensive car policy. They all act differently, and knowing which components can be changed helps a lot.
This covers harm or injury you cause to others. Under the Motor Vehicles Act, it is compulsory. The rate depends on engine size and is the same at every insurer. You cannot negotiate it.
This includes coverage for your own vehicle in case of collision, theft, fire and flood. This price is determined independently by the insurance companies. The money is most effectively saved through car insurance comparison.
This is the maximum amount that the insurer will pay in case of a stolen vehicle or a car being written off. It's based on the listed price of the car minus the car's depreciation for its age. The higher the IDV, the higher the OD premium.
The no-claim bonus is a discount offered on the OD premium for each year without a claim. After one claim-free year, it will be 20%, and then it increases to 25%, 35%, 45% and 50% after five years. It belongs to you, not the car, so you can take it to a new insurance company or a new car. Typically, you will lose it if your policy lapses for more than 90 days.
The extras are not essential and include zero depreciation, engine protection and roadside assistance. Each one adds cost.
Car insurance will include 18% GST on the full premium. However, individual health and life policies became tax-free with the changes to GST that took place in September 2025, while motor insurance remained at 18%. In brief, TP and GST are pegged. Your options matter most in your car insurance policy with regard to OD, your no-claim bonus, add-ons and the IDV in car insurance.
Follow these 7 steps at each car insurance renewal. They typically require about half an hour and are applicable to any insurance company.
1. Begin 3 to 4 weeks before expiration. There's no time to compare with a last-minute renewal. A lapse may also cost you your NCB and leave you with no insurance cover, adding to the risks under the Supreme Court's enforcement push.
2. Fix the IDV first and then compare. Get quotes from all insurance companies on the same IDV. A lower quote often simply means a lower IDV, which equates to a reduced sum to be received if the vehicle is stolen or totalled. The IDV should be close to the actual market value of the car and not much different.
3. Look at the OD premium, not the total. TP is the same across the board; the only difference is the OD part. Place each quote's OD number side by side before GST.
4. Make sure that your full NCB is what you're getting. Your NCB slab is indicated on your renewal notice. When switching insurers, be sure to take proof of your old policy with you. A missing NCB can add thousands to the bill.
5. Only keep add-ons that you use. Zero depreciation is helpful for newer vehicles, as parts such as bumpers lose value fast. If you live in a flood-prone area, engine protection is most important. If you travel over long distances, you can get roadside assistance. Drop the rest.
6. Take the voluntary deductible into account. It means that you agree to pay a set sum for each claim yourself, e.g. ₹2,500. Insurers will then provide a discount on the OD premium. Choose it only if you can afford that amount at claim time.
7. Look beyond price. Research the claim settlement record of the insurance provider, look for cashless garages close to you, and check the rapidity of their response. It may be more expensive, but a quick-paying policy can be a better deal.
Another tip: think twice before filing a small claim. For a ₹4,000 dent repair, you can end up losing more than that in NCB over the coming few years.
Ravi has a three-year-old petrol hatchback car with a capacity of 1,197 cc. He has been three years without any claims, so his NCB is 35%. The same IDV of ₹5,00,000 is used in both the quotes below. The OD rates, add-on prices and deductible discounts are examples only and will vary from one insurance company to another, and among cities and car types.
Quote A: No comparison, auto-renew
OD base premium: 3.0% of ₹5,00,000 = ₹15,000
NCB discount: 35% of ₹15,000 = ₹5,250
OD after NCB: ₹15,000 − ₹5,250 = ₹9,750
Add-ons: zero depreciation ₹3,000 + engine protection ₹1,200 + roadside assistance ₹500 = ₹4,700
TP premium (1,000–1,500 cc): ₹3,416
Compulsory personal accident cover: ₹375
Premium before GST: ₹9,750 + ₹4,700 + ₹3,416 + ₹375 = ₹18,241
GST at 18%: ₹18,241 × 0.18 = ₹3,283.38
Total: ₹21,524.38
Quote B: Comparison made and adjusted
OD base premium from a competing insurer: 2.6% of ₹5,00,000 = ₹13,000
NCB discount: 35% of ₹13,000 = ₹4,550
OD after NCB: ₹13,000 − ₹4,550 = ₹8,450
Voluntary deductible of ₹2,500: 20% of ₹8,450 = ₹1,690, capped at ₹750, so the discount is ₹750
OD after deductible discount: ₹8,450 − ₹750 = ₹7,700
Add-ons: zero depreciation ₹2,800 + roadside assistance ₹400 = ₹3,200 (engine protection was dropped; Ravi lives in a less flood-prone area)
TP premium: ₹3,416 (same as Quote A)
Personal accident cover: ₹375
Premium before GST: ₹7,700 + ₹3,200 + ₹3,416 + ₹375 = ₹14,691
GST at 18%: ₹14,691 × 0.18 = ₹2,644.38
Total: ₹17,335.38
The savings: ₹21,524.38 − ₹17,335.38 = ₹4,189.00. That is ₹4,189 ÷ ₹21,524.38 = 19.5% less.
Double-check: The difference before GST is ₹18,241 − ₹14,691 = ₹3,550. Adding 18% GST gives ₹3,550 × 1.18 = ₹4,189.00. Both methods match.
Note what Ravi did not change. His IDV remains the same, which means that he does not lose out on his payout in case of theft or total loss. The drawback of this is that he has to bear the first ₹2,500 of any claim.
Reducing IDV to make the policy less costly It saves a bit now and is expensive in case of theft or total loss.
Inflating IDV on an old car. As seen in the Delhi case, a value much higher than the market rate can lead to disputes and prolonged delays.
Allowing the policy to expire. You risk losing the NCB, being subjected to a vehicle inspection and driving illegally without TP cover.
Hiding facts. A claim may be rejected if incorrect information regarding past claims, NCB or car use is provided. Always declare accurately.
Buying TP-only cover for a high-value car. TP-only is less expensive, but provides no coverage if you damage your own vehicle.
Ignoring the terms of the contract. Check the exclusions, compulsory deductible and the depreciation rules before paying.
Time is required to do the 7 steps on your own. IRDAI-licensed insurance broker SimpliInsure provides a single place for comparison of insurance plans by various insurance companies. On the motor insurance page, you can view OD premiums, add-ons and IDV side by side. The list of partner insurers consists of both public and private companies, so you don't have to be restricted to one brand. SimpliInsure can also assist you as a broker to review your NCB, select suitable add-ons and follow up when a claim stalls.
The list of partners includes popular brands like New India Assurance, ICICI Lombard, HDFC ERGO, Tata AIG and Digit. The range is significant because the OD price for the same car can vary significantly from insurer to insurer, as the worked example demonstrates. A broker represents the client, not any particular insurance company; this gives you a broader perspective before deciding.
SimpliInsure is an initiative of Virtual Galaxy Insurance Brokers Pvt. Ltd. in Bengaluru. It has a direct broker licence from IRDAI for both life insurance products and general insurance products. So when it comes time for your health, life or home cover renewals, the same team will be there with you.
You cannot change the TP rate or the GST. You can change almost everything else. Keep a fair IDV, protect your NCB, compare OD premiums, and pay only for add-ons you need. Do this at every car insurance renewal, and you will reduce car insurance premium costs year after year.
Don’t auto-renew and overpay. Get a free second opinion from SimpliInsure. We’ll check your IDV, protect your NCB, and cut add-ons you don’t need, so you pay less without losing cover.
Disclaimer: The information provided above is for informational purposes only and should not be considered as financial, medical, or insurance advice. Policy details, exclusions and benefits may vary between insurers. Please consult official policy documents and seek professional advice before making any decisions.
SimpliInsure.com is an online portal managed by Virtual Galaxy Insurance Brokers Pvt. Ltd., registered with IRDAI as a Direct Broker (Life & General). Registration No. 750, Registration Code IRDA/DB859/21, valid from 2024 to 2027.
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