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Factors that Affect Your Car Insurance Premium

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Before getting on to the factors affecting the cost of your premiums and how to calculate car insurance premiums, we must first understand what a policy is and how it works. The policy would be a contract between you and the insurance company which states the terms and conditions. When car insurance is bought then there are two parties involved here. It is the customer who buys a policy and the insurer decides whether they are willing to provide that particular service. In addition, there are some hidden factors such as discounts, weather, a personal background that affect your car insurance premium's cost that you might not aware of.

Now let's move into the factors affecting car insurance premium!

1. Policy Type

There are two basic types of car insurance policies available in the market. Those are:

a) Third-Party Liability Car Insurance Policies

The prices for third-party liability coverage are set by IRDA. The IRDA considers your vehicle's engine capacity when determining the prices you have to pay for third-party insurance. Every year, the premium rate changes.

b) Comprehensive Car Insurance Plans

When it relates to comprehensive insurance, it covers both your car's own damage and third-party liabilities. These plans are typically far more expensive than third-party insurance. Since each automobile differs in a variety of ways, comprehensive premium rates fluctuate year after year and from one insurance provider to another.

2. The Insured Car

The brand, model, model year plays a vital role in determining the premium rate of a comprehensive car insurance policy.Car "brand" refers to vehicles from the same auto manufacturer, whereas "model" refers to vehicles from the same manufacturers but different builds. A "model" can have several "variants" as well as "versions." The insurance company keeps everything in mind when computing your insurance premium rate.

Your auto insurance costs are also affected by the kind of fuel you use. The premium rates for diesel, petrol and compressed natural gas varies. There is a baseline increase of 60 INR on third-party premium rates for CNG vehicles, however, the comprehensive insurance premium depends on whether the compressed natural gas kit is installed internally or outside and differs from one insurer to another.

3. Vehicle Registration

The RTO of the vehicle also has an impact on the insurance premium. Car insurance prices in India are classified depending on the region of the car's registration. The places are divided into two zones: Zone A and B.

Zone A covers the cities of Mumbai, Chennai, Hyderabad, Ahmedabad, Delhi, Kolkata, Bangalore, and Pune. Zone B encompasses the remainder of India. Cars registered in Zone A are billed a slightly higher premium value than vehicles registered in Zone B.

4. IDV

The comprehensive auto insurance premium is determined by the vehicle's ex-showroom price. As time passes, the automobile ages and the IDV decreases due to depreciation. The IDV supplied by insurance providers for used automobiles is lower than that offered for new cars. As a result, the premium for used automobiles is reduced. A brand-new automobile, on the other hand, has significantly higher IDV and premium values.

5. The Policyholder

The policyholder has a significant impact on the premium for insurance coverage. If the applicant's driving history contains several red flags, such as speeding fines or being involved in too many traffic accidents, the insurance company may determine that this individual is "too hazardous" to cover and reject your application, or they may charge you a higher premium rate. If you exhibit evidence of reckless driving after receiving your insurance, your insurance company may opt to cancel your coverage entirely. So, if you are one of those risky drivers, you can calculate car insurance premiums after factoring in a large sum for your habits.

6. Additional Discounts

Yes. You are eligible for certain discounts if you meet any of the following criteria:

● Indian Automobile Associations member

● Set up an anti-theft gadget.

● Select the Voluntary Deductible option.

Aside from this, comprehensive automobile insurance coverage also provides a No-Claim Bonus. If you do not submit a claim during a policy year, you will earn a considerable premium discount when renewing for the next year. The value of the discount continues to climb until it hits 50% for the fifth year in a row. So, if you are a careful driver, you can calculate car insurance premiums after factoring in a good value in discounts.

Conclusion

Use the guide we outline here to determine what you need and what you can afford. Because when it comes to something as important as your auto insurance, there is neither room for underpaying nor for overpaying—only for protecting yourself. The best way to make sure you are getting the right deal is to calculate car insurance premium and compare the quotes. This ensures that you get good value for your cash.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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