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Insurance Article

The Pros and Cons of Staying with the Same Car Insurance Company

April 20 2021

As per the existing Motor Vehicle laws, a valid third-party motor insurance policy is mandatory to drive a vehicle in India. Hence, every car owner needs to renew his/her car insurance policy before its expiry date. At the time of policy renewal, the policyholder can either continue with the same insurance provider or switch if he/she is not satisfied with the existing policy.

However, most vehicle owners prefer to continue with their existing insurance providers as it's convenient. Though staying with the same insurance company for many years provides multiple benefits such as hassle-free renewal, loyalty bonuses, and reward points, it also entails a fair share of disadvantages.

In this article, you will get to know the merits and demerits of staying with the same motor insurance company for multiple years. After that, you will be able to make a better decision about whether you should switch your car insurance provider at the time of policy renewal or not. Continue reading.

What are the pros of staying with the same insurer?

There are several rewards your car insurance company can offer to you if you choose to stay with it for several years. Usually, these rewards are offered in the form of loyalty bonuses and perks to the policyholders.

Below are the benefits you can avail of by staying with the same insurance provider for an extended period:

Build a trusted relationship with the insurer

Staying with one insurance company for many years can help you build a trusted relationship with your insurer. With a strong relationship, you can trust your insurer to have your back during difficult situations. Moreover, you'll be familiar with how to reach the insurer for claims, what are the turnaround times for different requests, etc.

Also, when you stay with an insurer for a longer period, it becomes familiar with your driving behaviour and claim history. Hence, it understands your insurance requirements better.

Get a decrease in deductibles

Some insurance companies offer a reduction in compulsory deductibles for customers who are loyal to them. Usually, insurers may give these benefits to policyholders who stay with the same insurer for several years and do not raise any claims.

Insurance companies also give an option to increase/decrease the voluntary deductible at renewal. Based on how much you can afford to pay out of pocket for a claim, you can decide whether the deductible amount (and resultant reduced premium) is worth going for.

Get accident forgiveness option

Some car insurance companies offer "Accident Forgiveness Option" to their loyal customers having a good driving record. Under this benefit, your insurance company may forgive or not consider your first "at-fault" accident. And since your accident won't get listed in the insurer's records, it will prevent your car insurance premium from going up.

Remember that you can't transfer your accident forgiveness to a new insurer, and hence, it gets nullified when you switch your insurer.

No hidden costs or charges

When you stay with an insurance company for the long term, you understand the terms and conditions of your policy altogether. This prevents you from incurring any hidden costs or charges when you file a claim on your policy.

Also, when you switch to a new insurer, you may incur some extra charges, which may make your premium expensive.

Ease of renewal

When you renew a car insurance policy with your existing insurer, all you need to do is visit the insurer's website or office, provide the policy number, and pay the renewal premium. However, when you choose to switch your insurer, you may have to provide all your vehicle details to renew your policy.

Some insurers may even want to inspect your car for renewing your existing car insurance policy from a different insurer.

What are the cons of staying with the same insurer?

Now, you know the benefits of staying with an insurer for a long period. But remember that every coin has two sides. So let's explore the downsides of not changing your car insurance company every year:

You might end up paying more

Your current insurer might be offering you the best in terms of coverage, but it doesn't mean it's providing you with the best-priced policy. For example, you may be able to get a car insurance policy from another insurer, offering the same coverage but at a lower price. Also, due to the cut-throat competition in the industry, you may be able to fetch a better deal when you switch your insurance company.

The cover might not suffice

The opposite of the above point can also be true. Your current policy might be the most affordable, but it may not be able to cover you against all types of risks. Therefore, at the time of policy renewal, you should thoroughly read the inclusions and exclusions of your existing policy. If you're not satisfied with it, you should switch your insurance provider.

You can get a broader range of service benefits

In some instances, you may find out that a different insurer is offering a more comprehensive range of service benefits than your current insurer. For example, you can get more add-on covers to choose from, the option to buy car insurance online, a wider network of cashless garages, and a faster claim settlement process. Under such scenarios, it makes sense to switch your car insurance company.

So, what should you do?

Whether you should stay with your existing insurer or change your car insurance company should be your personal decision at the time of policy renewal. However, you must consider your coverage requirements and financial situation before taking a call. What you can do is compare different policy offerings from various insurers and determine if your current policy is offering the coverage you need, and that too, at the most affordable price.

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