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How to bring down your auto insurance cost ?
ICICI Prudential Dynamic Plan
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How to bring down your auto insurance cost ?

Posted: 23 May 2012 12:21 AM PDT

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The insurance regulator has hiked the third-party motor insurance premiums in line with its decision last year to review the rates annually. Some insurers are also planning to revise their 'own damage' rates. Put these two pieces of news together and it is a fair guess that your overall premium will go up when you buy or renew your motor insurance. Don't lose hope though. There are many ways to keep the total premium on the comprehensive motor policy under control.

Let go of smaller claims

You are entitled to a no-claim bonus (NCB) for every claim-free year. If you don't make any claim for a few years, the NCB can reduce your premium cost by as much as 50%. So, don't rush to make a claim for fixing every small dent on your car. Sometimes, what you spend on repairs could be less than the amount you stand to lose as no-claim bonus. Weigh whether the damage is worth filing a claim for or is it smarter to wait for another claim-free year.

Opt for a higher deductible

You can also opt for a higher deductible amount in the policy. This means that you will pay the initial 5,000-10,000 of the repair bill and the insurance company will pay the balance. The higher the deductible, the lower is the premium. However, don't opt for too high a deductible just to bring down the cost of insurance. You might end up paying more than the amount you stand to save.

Share more information

Many insurers offer better rates these days to customers who are willing to share personal information, such as age, gender, marital status, occupation, claim history and driving track record. For instance, Berkshire Insurance, which distributes Bajaj Allianz's motor insurance policies, offers a discount of 5% to those who provide details about themselves by answering the questions in the forms. The premium for a young male who smokes will be higher than that for the same amount of cover for a young, nonsmoking female. The details help in the correct calculation of premiums and also in getting discounts of 10-25.

Be careful about add-on covers

The add-on features like depreciation cover, roadside assistance, emergency expenses, and hospital cash, may have immense utility value, but some agents try to push unnecessary covers as well. Tally the policy features with your needs before buying the add-ons. This will ensure that your premium is not inflated for options you may never use.

Sign up with auto associations

Becoming a member of the Automobile Association of India (AAI) or its affiliates gives you a discount on the premium rates from some insurers; the discount could be lower of 5% or 200 on the own damage premium for private cars. Similarly, if you install an anti-theft device approved by the Automotive Research Association of India, you could claim a discount of 2.5%, subject to a maximum of 500.

Stick to the mandated part of cover

As per the prevailing law, you have to buy a minimum cover of 6,000 to compensate third parties for any property damage. Sure, you have the option to buy a higher cover, which may come in handy if there is a huge payout, but remember that your premium will also rise. If you want to keep the premium low, opt only for the mandatory cover.

Transfer no-claim bonus while selling a car

If you are planning to upgrade your car, you can bring down the insurance cost by transferring the no-claim bonus of your old car. If you have been a careful driver and have a 40-50% no-claim bonus, get it transferred when you sell your car. The insurer will issue a no claim certificate, which will get you the discount on the new car's insurance. If the insurance of the new car works out to 15,000, a 50% no-claim bonus will reduce it to 7,500. This no-claim certificate is valid for three years from the date of issue. Termination of the insurance means your old car is without a cover. Since a buyer typically assumes the car comes with insurance, make things clear while striking the deal. In most cases, buying new insurance for the old car may still be cheaper.

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ICICI Prudential Dynamic Plan

Posted: 22 May 2012 10:01 PM PDT

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ICICI Prudential Dynamic Plan is a flexi-cap opportunity fund launched in November 2002. The fund has been ranked in the top 30 percentile, that is, either CRISIL Fund Rank 1 or CRISIL Fund Rank 2, of the peer group in the 'Diversified Equity Funds' category under CRISIL Mutual Fund Ranking methodology for 13 of the past 16 quarters. This methodology looks at a fund's performance in the past two years.

Over a longer time frame, the fund has been ranked CRISIL Fund Rank 1 in the 'Consistent Performers - Equity' category for the quarter ended December 2011, wherein the fund entered this category for the first time. The 'Consistent Performers' category ranks those funds which have been part of the CRISIL Mutual Fund ranking for a five-year time frame. The rank is a composite of historical performance of the fund in the CRISIL Mutual Fund Ranking and risk-adjusted return of the fund over a five year period. The fund's average assets under management (AUM) were ~3,962 crore for the quarter ended December 2011.

Investment style The fund dynamically manages its equity exposures in response to equity market valuations. It has increased the equity exposure when the markets were undervalued and decreased it when the markets were overvalued. As compared to peers, the fund has aggressively managed its equity exposure. Since inception, the fund has been able to outperform its benchmark(S&P CNX Nifty) 71 per cent of times in a downtrend (benchmark giving negative returns quarter-onquarter) and 68 per cent of the times in an uptrend (benchmark giving positive returns quarter on-quarter). This indicates that the fund's strategy has helped in outperforming the benchmark on majority occasions across market phases.

Performance The fund has outperformed both the benchmark and the category across multiple time frames, viz., one, two, three, five and seven years. For the past one year, the fund gave positive annualised return of three per cent as against two per cent by the category and negative return of one per cent by the benchmark. Over the longer time frame of seven years, the fund gave an annualised return of 21 per cent vis-à-vis 14 per cent and 16 per cent by the benchmark and category, respectively. A monthly systematic investment plan (SIP) investment of ~1,000 for seven years would have grown to ~1,42,139 as on March 14, 2012 (principal invested of ~84,000) resulting in annualised returns of 15 per cent. A similar investment in the benchmark would have grown to ~1,16,958, yielding nine per cent annualised gains.

Risk The fund has managed to generate higher returns than the benchmark and category while maintaining low volatility over the past five years. The average monthly volatility for the fund over this period was 23 per cent vis-à-vis 27 per cent and 28 per cent for the category and benchmark, respectively. Since inception, the fund has a beta of 0.8 indicating relatively lower risk.

Portfolio analysis The fund has a well diversified portfolio with average 59 stock holdings over the past three years. At the sector level, the fund is more concentrated than its peers. The top 5 sectors of the fund formed 63 per cent of the fund as against 56 per cent for the category over the past three years. Within equities, the fund has taken a majority exposure to large cap stocks. Over the past three years, the fund has taken an average 77 per cent of its equity exposure to CRISIL defined large cap stocks. Further, almost 52 per cent of these stocks were part of the S&P CNX Nifty.

Overweight ex

posures to sectors like pharmaceuticals, healthcare and telecom and underweight exposures to petroleum products, power and industrial

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