Ultimate Car Insurance Premium Guide

Considering the large number of vehicles on the road and the rising number of accidents each year, the significance of car insurance policies in India cannot be stressed enough. The fact that road accident deaths went up by 7% in the first 5 months of 2022 is a substantial proof of this. (Source: TOI) 

Also, as per Section 146 of the Motor Vehicles Act, 1988, to be entitled as a licensed driver in India, your new or used vehicle must necessarily be covered under a valid car insurance policy. (Source: General Insurance Council). In addition to satisfying legal requirements, having car insurance is advantageous for you as it covers all costs associated with the vehicle, such as theft, natural disasters, etc.

When selecting a car insurance plan, the insurance premium acts as the most crucial decisive factor. But, have you ever wondered how this premium is determined? Cost of your car insurance premium is affected by a number of factors, some of which are discussed below.

Key Factors Affecting Car Insurance Premium

1. Make & Model of Your Car: Your car’s make and model might have some impact on your car insurance premiums. The premium for vehicles with a higher cubic capacity of the engine can be different than that for vehicles with a lower cubicle capacity.

Several car models are priced according to their fuel intake, and this can also have an impact on premium rates. For instance, premium rates for cars that operate on gas or CNG may vary from those that run on petrol, diesel, or electricity.

A luxury sedan will have a higher premium rate as compared to a hatchback. Additional factors such as the car’s manufacturer, model, and other characteristics also directly affect the car insurance premium.

2. Insured Declared Value: Insured Declared Value or IDV is the maximum claim amount your insurance company will compensate you if your car is stolen or damaged beyond repair.

IDV, which is often set by the insurer, is the estimated current market value of your car after subtracting the depreciation value.

With the decline in the vehicle’s value brought on by depreciation, the IDV of the car decreases. Anyhow, the higher the IDV, the higher will be the premium.

3. Gender and Age of the Policyholder: Age and gender are the two most important factors that determine the premium of your car insurance policy. As a result of the perception that women are safer drivers than males, some insurance companies even provide discounts to female policyholders on premiums.

The cost of premiums is higher for single people than for married people. The customer’s age is another personal aspect that influences how much they pay for car insurance.

4. Coverage Type: Your choice of coverage will also affect the premium for your car, which might result in a higher or cheaper premium for your car insurance. In India, a basic third-party policy is mandated by the law. It provides third-party damage coverage at a lower premium.

However, comprehensive insurance coverage comes with a slightly higher price and covers third-party liabilities and other essentials. 

5. Safety Features: Your final car insurance premium can also be reduced if you have an effective car lock or anti-theft device installed. Car alarms and other anti-theft equipment warn the owner in case of any mishap. Modern cars are equipped with GPS systems that help in tracking down stolen vehicles.

6. Add-ons: Extensions to the standard coverage, add-on covers provide additional protection for an additional cost. Numerous add-ons are often available with car insurance plans, including engine protection cover, medical coverage, roadside assistance, passenger coverage, etc. Your premium cost will increase in direct proportion to the number of add-ons you buy.

However, the important thing to keep in mind, is that having add-on covers can provide your car with extended protection for just a little extra amount over the cost of the insurance premium, and it may prove to be a valuable investment.

How to Lower Car Insurance Premiums?

Earlier, we discussed the factors that affect car insurance premiums rate. Now, below are some tips to help you lower your car insurance premium.

• Check out all the Available Plans: When purchasing a car insurance policy, you should compare all the insurance options provided by various providers and choose a plan that fits both your budget and offers all the coverage you need.

• No Claim Bonus: Refrain from filing minor insurance claims for scratches or minor repairs. You will be eligible for a No Claim Bonus if you do not file any claims throughout the policy period. As a result, your premium will be lower when you renew your insurance policy.

• Driving Safely: Drive safely and make every effort to avoid getting involved in any kind of accident or collision. Car owners with spotless driving records get substantially cheaper insurance premiums than those with a history of collisions or traffic violations.

• Getting Insurance Online: Buying a car insurance policy online is less expensive as there are no commission charges involved. Yet, some consumers are hesitant about purchasing insurance online. The truth is that the insurance policies purchased online are just as valid as those purchased in person.

• Add-on Covers: When purchasing comprehensive car insurance, it can be tempting to get all the add-on covers to benefit from the extra protection. To reduce the cost of your car insurance premium, analyse the extra coverage you need and discard the unnecessary ones.

The aforementioned factors play a crucial role in deciding how much your car insurance costs. Additionally, with the help of the tips mentioned above, you can choose a car insurance policy that will meet all your insurance needs at a premium that works for you.

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