Vehicle dealers not last stop for auto insurance

A Mumbai resident who recently bought a midsized car was stumped when the dealer demanded Rs 48,000 premium for the annual comprehensive car insurance. “I did some online research independently and got several quotes from insurance companies, one of which was as low as Rs 25,000. I went back to my dealer who then matched it.’’

In other words, if you plan to buy a car, you don’t have to necessarily pick up motor insurance from the dealer. You could approach insurance companies directly and negotiate a lower premium and secure up to 50% discount on what your dealer offers. According to Delhi-based consumer expert Bejon Misra and former General Insurance Council secretary general K N Bhandari, dealers are known to mark up premium.

While insurance companies TOI spoke to deny knowledge of such a practice, Bhandari says, “Higher the premium, higher the commission. There is a need for consumers to assert themselves even to the regulator to enforce greater surveillance and more stringent implementation of insurance guidelines.’’

Another Mumbai resident who just bought an SUV says, “When people take an LPG connection, they think it is compulsory to pick up a gas stove from the dealer. The same mindset works here.’’ He too managed to bring down the dealer’s quote from Rs 38,000 to Rs 14,000. “The range of quotes is shocking,’’ he says.

Importantly, the dealer did not mention that he was entitled to a no-claims bonus as well, considering he had not made a single insurance claim on his old car. The bonus is transferable across insurers and vehicles-provided you sell your old vehicle.
Says Rahul Aggarwal, CEO at Optima Insurance Brokers, “The bonus is on percentage basis and not in rupee terms. It changes every year. The minimum is 20% on own-damage premium and maximum, 50%.’’ The percentage remains unchanged even when one upgrades from a smaller vehicle to a large one, assures Aggarwal.

An official at the Insurance Regulatory and Development Authority (IRDA), while asking consumers to be more aware, says, “Dealers are neither agents, brokers nor insurers. What they quote is what they get from insurers. They can’t quote more or less than that.’’ Consumers should cross-check the price offered by various insurers, says the official. “Nobody should get carried away. No dealer can force you to get insurance.’’

Budget Measure Requires Drivers Get Auto Insurance

MADISON, Wis. -- A provision requiring drivers to have auto liability insurance was signed into law on Monday as part the state budget.

By July 2010, every driver will be legally required to carry auto insurance. The amount of liability insurance also goes up in January.

Critics say the move will raise rates for everyone, but those who support it say it's a move toward more consumer protection.

"It really is more updating some of the limits you have, what are called financial responsibility limits, that had not been changed in 25 years," said Sean Dilweg, the state insurance commissioner. "And those are being increased two-fold, which really, if you think of medical costs, really falls in line with what people face," said Dilweg.

After July, New Hampshire will be the only state in the country that doesn't require drivers to be insured.

Beating the Rate Hike on Car Insurance

Gas prices are down by a third from a year ago, but the costs of owning a car may be heading up, courtesy of your auto insurance. After two years of staying flat, rates rose an average of 2.5 percent in 2008 and could rise up to 7 percent this year—the biggest increase in more than five years, according to brokerage firm Stifel Nicolaus. Some tips to avoid the jump:

Bargain hard
Insurance companies may refuse to budge if you ask for a rate rollback. But “there’s always room to bargain,” says Michael McRaith, director of Illinois’s insurance division. One thing your underwriter might do is apply new discounts. Some carriers offer discounts for professional degrees—even a master’s in education may qualify—while others may apply a “persistency” credit just for being a longtime customer. If you’ve started working from home or get laid off, let your insurer know you’re no longer commuting by car. You could save up to 10 percent, for example, if you now drive less than 10 miles a day.

Tweak your policy
Most experts don’t advise going with your state’s minimum liability coverage, since a lawsuit over a severe bodily injury could then wipe out your net worth. But opting for a higher collision deductible—from $500 on a typical policy to $1,000—could knock 5 percent off the premium on that line of the policy, analysts say. Most consumers file claims only once every eight to 10 years, so you’ll probably come out ahead in the long run, says Jeanne Salvatore, senior vice president at the Insurance Information Institute. Bundling your auto and home insurance with the same carrier could shave a few bucks too, as could trading in your car for one that’s less costly to insure.

Get smarter about credit
Underwriters use a credit-based score to help calculate your premium—and if you have a few black marks on your record, you’ll probably get hit hardest. Paying overdue bills and fixing errors on your credit report are good places to start. Using less of your available credit can hike your score too, according to Fair Isaac, the big credit-scoring firm. Insurers such as State Farm may also give you a break for a hardship such as a job loss, divorce or identity theft. Only certain hardships qualify, and only if they negatively affect your score. But you won’t get a break if you don’t ask.