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Impact of Different Regions on Car Insurance Policy Premium

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As you plan to buy a car, one of the first things that you would need is a car insurance policy. However, with so many insurance providers and policies, it can be difficult to zero down on one policy. Thus, buying car insurance online is one of your best bets. As you buy car insurance online, you can compare it with policies from different insurance providers. This will allow you to buy a policy that fits your budget and provides good car coverage. When you opt for car insurance online, there is minimal paperwork that you must do. This makes the entire buying process a much smoother and hassle-free one. And buying online gives you instant access to the policy papers in your registered email address within a few minutes of buying.

Insurance Premium Deciding Factors

It should not come as a surprise that a few factors decide the policy premiums you end up paying for your car. Some of these factors include the car's make and model, the car's age if you have opted for any add-ons, if there are any no-claim bonuses, etc. A crucial factor among those is the location.

The place where your car is registered plays a significant role in deciding the policy premiums. Car buyers usually buy a car and register it at their nearest RTO. Thus, if you change your residential address, there is a chance of your policy premiums changing as well.

It is important to note that moving to a different locality might or might not have a major impact on your policy premium. However, if you are changing states, the chances of it having an impact on your premiums are high.

Car Insurance Zones

The IRDAI or Insurance Regulatory and Development Authority of India is the regulatory body that looks after all insurance matters in the country. For convenience and ease of operations, they have divided the country into two primary zones, Zone A and Zone B. Depending on the car's registered zone, the policy premium would vary. Zone A includes most of the major cities in the country, such as Bengaluru, Mumbai, New Delhi, Chennai, Kolkata, Pune, Hyderabad, and Ahmedabad. Zone B includes all other cities in the country.

What Impact does an Insurance Zone Have?

Claims play a major role in deducing a premium for different zones. As you would have already noticed, Zone A cities are urban ones and are among the busiest in the country. Cities in Zone A are densely populated as well. In other words, there are many more vehicles on the road, which increases the chances of accidents. Thus, insurance companies ask for a higher premium to cover the higher risk involved. The engine capacity of your car, along with its age, help in determining the premiums. Here are two simple tables to help you better understand the difference.

Zone A Calculation

Age of Car	Engine Capacity <1,000 cc	Engine Capacity between 1,000 cc and 1,500 cc	Engine Capacity above 1,500 cc
0 to 5 years	3.127% of IDV	3.283% of IDV	3.440% of IDV
5 to 10 years	3.283% of IDV	3.447% of IDV	3.612% of IDV
Above 10 years	3.362% of IDV	3.529% of IDV	3.698% of IDV

Zone B Calculation

Age of Car	Engine Capacity <1,000 cc	Engine Capacity between 1,000 cc and 1,500 cc	Engine Capacity above 1,500 cc
0 to 5 years	3.039% of IDV	3.191% of IDV	3.343% of IDV
5 to 10 years	3.191% of IDV	3.351% of IDV	3.510% of IDV
Above 10 years	3.267% of IDV	3.430% of IDV	3.596% of IDV

In the above tables, the IDV refers to the insured declared value of the car. The IDV is essentially the current market value of your car. As you buy car insurance online, you have the ability to play around with the IDV of the car. A higher IDV would ensure better compensation in the case of a total loss of your car. On the flip side, it will increase the policy premium. A lower IDV would result in a lower premium but you might end up having to pay from your pocket during repairs.

Other Factors Impacting Premiums

As already mentioned, the insurance premium is not dependent only on the location or region that you reside in. The following are some of the other factors.

1. Age of the Car

A car is fundamentally a depreciating asset. In simple words, its value degrades over time. Thus, an older car would fetch a lower policy premium as compared to a new car.

2. Type of Car Insurance

There are quite a few types of car insurance policies that you can choose from. To start with, you can opt for the third party car insurance policy. It offers minimal coverage and is light on your pockets.

Secondly, you can opt for a comprehensive insurance policy. Comparatively, the premiums are high, but you also get much better coverage for your car.

You can now opt for a pay-as-you-go insurance policy as well. Here, you only need to pay for the total distance you cover over a term. It turns out to be cheaper than a comprehensive policy.

3. Add-Ons

It is not mandatory to buy add-ons along with your car insurance policy. However, they can greatly enhance the coverage of your policy. You would need to pay a small premium for every add-on that you tag along with your policy.

4. IDV

The IDV or the insured declared value of your car is instrumental in deciding the policy premium. As mentioned above, a higher IDV would result in a higher policy premium, and a lower IDV would result in a lower premium.

Save On Policy Premiums

One of the smarter ways for you to save money on your insurance premium is to buy car insurance online. As you buy car insurance online, you will most likely get the best deal out there. A simple comparison of policies allows you to pick a policy that is feature loaded and is light on your pockets as well. Car insurance online involves minimal paperwork as well. If you aren't particularly fond of paperwork, you will enjoy buying the policy online.

As you car insurance online, there aren't any agents that you have to deal with. This ensures you learn much more about your policy than you would have otherwise. And buying online saves you a lot of money as well.

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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