Introduced

As much as it’s exciting to have your own car, ownership is not easy. It comes with many responsibilities and amongst the most important ones is having the right car insurance. In India, having insurance for car is actually a legal requirement. Speaking of insurance, should you go for monthly premium payments or annual plans? Also, how do you find the cheapest insurance for car that gives you the required coverage? Let’s learn the difference between monthly and annual premium plans and also compare their costs, benefits, and drawbacks to know what might suit you better.

What is Car Insurance?

When you get an insurance for car, you get protection against financial losses in case there’s an accident, theft or damage. In such situations, you don’t have to pay huge amounts from your pocket because, as per policy terms, your insurance company will take care of it.

Here’s what a good car insurance usually includes:

• Third-party liability– It covers damages or injuries that are caused by you to another person.
• Own damage cover– Damages that happen to your own vehicle due to accident, theft, fire or natural disasters are covered with this.
• Add-ons– You can also incorporate a few extra features like zero depreciation, roadside assistance or engine protection to make the policy even stronger.

A comprehensive coverage is a very good idea because it gives all-around protection. However, many people look for the cheapest insurance for car because it offers both affordability and benefits.

Monthly Premium Plans vs Annual Premium Plans

When you are buying car insurance, the insurance providers often give you two options to make the payment:

1. Monthly Premium Plan– Premium is paid in smaller amounts every month.
2. Annual Premium Plan– You can also pay the entire premium at once every year.

Now, both options have their own set of pros and cons that we must know about:

Monthly Premium Car Insurance

As discussed, you don’t have to pay a lump sum in one go but a small amount every month.

Pros:

• Smaller payments are obviously easier on the pocket.
• It’s a lot flexible because it’s ok you don’t want to commit a large amount at once.
• Very practical for people on tight monthly budgets.

Cons:

• It actually ends up being more expensive in the long run because you’ll be charged extra for opting for monthly installments.
• Policy may lapse in case of missed payments 
• In India, not all companies offer the option of monthly insurance for car 

Annual Premium Car Insurance

Opposite to the monthly option, in this, you pay a one-time payment for the premium for the whole year.

Pros:

• If you look in the long term, it comes out as cheaper compared to monthly payments.
• You don’t have to worry about missed payments or the policy getting lapsed.
• You may also get discounts for annual payments, making it an affordable and cheapest insurance for car

Cons:

• Since it’s a bigger one-time payment, it will certainly feel heavy on the pocket.
• It’s not really flexible for those who prefer smaller and periodic payments.

Cost Comparison: Monthly vs Annual Premiums

Let’s take an example to understand both types of car insurance plans.

Person X was looking for the cheapest insurance for car and selected a monthly plan at ₹1,200 per month and by the end of the year, he paid ₹14,400. His friend, person Y, opted for an annual plan at ₹12,500 and ended up saving nearly ₹2,000. Y also had more peace of mind since he didn’t have to remember that there’s a monthly payment coming up.

This is a simple example that shows that yes, monthly plans do feel lighter on the pocket initially but annual plans are actually more cost-effective in the long run. One-time yearly premiums are overall cheaper but if you prefer smaller and manageable installments, opt for monthly.

Which Option is the Cheapest Insurance for Car?

If you are on your hunt to find the cheapest insurance for car, you must go with an annual premium plan. This will give you financial benefit because:

• Insurers tend to provide discounts for one-shot payments.
• There are no extra charges added.
• You also stay away from the risk of missing your monthly payment.

However, if you need to manage the existing cash flow and stay budgeted for the month, monthly plans will be more convenient for you. While overall they cost slightly more, you will be comfortable.

Factors That Affect Car Insurance Premiums

There are certain factors that influence the decision to make monthly or annual payments:

1. Car Model & Age– Insurance amount for luxury and new cars is more than for older and smaller cars.
2. Location– Metro cities have higher accident and theft risks and hence, higher premiums.
3. Coverage Type– If you need comprehensive insurance, it would surely cost more than just third-party coverage.
4. Add-ons– If you add extra benefits, it will add to the total cost.
5. No Claim Bonus (NCB)– Not claiming insurance in a year gets you a discount on renewal.

If you want the cheapest insurance for car, it’s suggested to choose only the essential coverage and skip any unnecessary add-ons otherwise, you will have to pay more.

Benefits of Comparing Car Insurance Plans

With so many insurers in the market, you can only find the most affordable insurance for car by comparing different policies. You can refer to online comparison tools for a quick and easy reference.

• Better Coverage for Lower Price– Each insurance company offers different or unique benefits at almost similar costs.
• Discounts & Offers– Some insurers also run festive discounts, offers on online purchases or even loyalty rewards.
• Customized Plans– You can tailor your car insurance by adding only the features you really need.

Tips to Save Money on Car Insurance

Some small steps can really help you land the cheapest insurance for car with the right protection:

1. Opt for Higher Deductibles– If you agree to pay a small amount during claims, your premium can be lowered.
2. Maintain a Clean Driving Record– Be careful while driving so that there are fewer accidents and claims. This will make insurance cheaper.
3. Bundle Policies– Some companies offer good discounts if you buy both car and health insurance from them.
4. Renew on Time– Avoid policy lapses because late renewals can increase your premium.
5. Use No Claim Bonus (NCB)– Maintain your NCB so that renewal premiums can be reduced.

Common Mistakes to Avoid

Here some mistakes people commonly make that usually backfires them:

• Choosing only by price– A cheapest plan may also mean not enough coverage.
• Ignoring exclusions– Don’t skip the fine print and read carefully to know what’s not covered.
• Skipping add-ons blindly– Some add-ons can actually be very useful like roadside assistance, so you must add them.
• Not comparing plans– Settling for the first plan offered is not a good idea. Always shortlist a few and compare. 

Which One Should You Choose?

Well, choosing between a monthly and annual premium car insurance plan actually depends on your personal situation. If you want to take the expense one month at a time, monthly plans will be comfortable for you. But if you aim to save money in the long run, annual premiums are the smarter choice. Honestly, the annual plans are usually the cheapest insurance for car anyway.

Regardless of which option you pick, do it only after comparing different insurers, checking the coverage amount and double-checking the terms & conditions. If you need pro assistance, you can always get in touch with the PolicyWings team to help you with the right insurance for car.