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Know why your car insurance premium increases every year

Cars are much more than a necessity for most of us,a means of convenience,we have financially as well as emotionally invested in our cars. And hence we don’t think twice before securing our cars with a car insurance policy. But when the car insurance premium surges every year and becomes dearer,that’s when most of us experience doubt and hesitation. And while seeing your premium increase each year is not a welcome sight,it may be something you should anticipate. Here are a few factors,some of which are in your control that cause your insurance premium to scale:

Factors within your control:

  • Driving habits:With distracted driving on the rise,it is no surprise that the no. of accidents are on the rise too. Defaulting on rules,not wearing a seatbelt etc could cause trouble not just with the lawmakers but also your insurance provider that keeps a track of driving offences under your name. This will in turn increase your premium.

  • Number of claims filed:If you have a history of regular claims the insurance company will deem you as a risky profile and hence charge you a higher premium. It is simple math,higher the risk more the premium.

  • Make and model of your car:Since the cost of the vehicle depends on the model,the insurance premium rate will differ between models. If the Insured Declared Value (IDV) is higher,then the premium will be higher compared to a car with a lower IDV. Also if your car model is discontinued by the manufacturer then its parts or components will be hard to procure. This can result in an increase in your premium,so choose your car accordingly.

Factors beyond your control:

  • Your geographical location:Where you reside and park your car is also a factor that affects your car insurance premium. If you live in a region prone to vandalism or theft,your rates may increase to offset any potential losses.

  • Increase in the third party insurance rates:Third-Party car insurance is mandatory and covers liability due to third party claims arising out of accidents. The IRDAI is responsible for the regulation of Third-Party vehicle insurance premium rates which are increased on an annual basis,thereby increasing your car insurance premium rate.

  • Age of your car and the driver:In a contrast as your car gets older your premium increases and the younger the driver the more premium you end up paying. The reason being an older car is more prone to wear and tear while a new and young driver lacks the experience of a seasoned driver. However opting for a Zero Depreciation cover with your insurance plan will help reduce your premium marginally.

There are several other factors that come into play in deciding the premium of your car insurance,to more on the factors and get the best quotes on your premium click here. Finally opt for the one that is tailor made for your needs and meets your budget too.

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

This blog has been written by

S. Gopalakrishnan | Motor Insurance Expert | 40+years of experience in insurance industry

A veteran in insurance industry. S. Gopalakrishnan is a name to reckon with in the field of reinsurance,he has headed the Reinsurance department and has rich experience in other fields of motor insurance. He loves to share his opinion on latest topics in the insurance industry and how he can help people in safeguarding their assets using insurance products.

Mr.S. Gopalakrishnan recommends "HDFC ERGO for your vehicle insurance needs, it has always put customer’s interest at the forefront, with round the clock assistance to deal with emergency breakdown issues and hassle free claims process. You can be assured of complete and reliable guidance through the whole process." 


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