Did you know you can hold onto your motor insurance policy even after you sell your vehicle? No one tells about you this.

If you never make  any insurance claims – be it for accidents or otherwise – you are eligible for a no claims bonus (NCB). This will progressively reduce your premium when you go for renewal.

For example:

___________Value of Car ______NCB_______Approx Premium

First Year             4 Lakhs                      0                          Rs. 12500

Sixth Year            2 Lakhs                     50%                     Rs. 3500

Say after the sixth year you want to buy a new car worth Rs. 8 lakhs. The premium for the new car will be approximately Rs. 28000. However, if you retain the old car’s policy and get it transferred to the new vehicle, you will be paying only Rs. 14000. For a long time I was unaware of this because no-one told me, neither showroom sales executives nor insurance agents. Perhaps it’s because they may lose commissions. I don’t know.

One other point: Please go through your policy thoroughly to understand exactly what is covered and what isn’t. You might otherwise be misled into taking the cheaper option only to realize later that natural disasters like earthquakes and monsoon damages are not covered. This would be a disaster made by you if your car has just suffered a hydrolock. (How to avoid hydrolocks)

Most importantly: If you are eligible for NCB, please retain the old policy and don’t give it away with the car. You can make significant savings, enough to pay for the education of a child if you are so inclined.  Keep this point in mind when you are buying a car and perhaps you can contribute to reducing the illiteracy percentage in our country.