Negosentro | What are the Different Factors that Affect Your Car Insurance Premiums? | Car insurance is a must-have for every car owner in India. It protects you from the financial losses that may arise from accidents, theft, fire, natural disasters, or third-party liabilities. However, the cost of new car insurance can vary depending on various factors influencing the premium amount. This blog will discuss some of the most critical factors affecting car insurance premiums and how to save money.
Type of Car Insurance Policy
The first and foremost factor determining your new car insurance premium is your choice of policy. Three car insurance policies are available in India— Third-party, standalone damage, and comprehensive cover.
The primary difference between comprehensive and third-party insurance is that the former covers damages to your car and other expenses. Whereas; the latter only pays for the damage to the other person’s property or bodily injury not inside the insured car.
Insured Declared Value of Your Car
The Insured Declared Value (IDV) of your car is the maximum amount you can claim from your insurer in case of total loss or theft of your vehicle. It is calculated based on the current market value of your car after deducting the depreciation as per the standard rates prescribed by IRDAI. The higher the IDV of your vehicle, the higher your policy premium will be and vice versa.
No Claim Bonus
The No Claim Bonus (NCB) is like a reward from your insurance company for not making any claims in a year. It is like a discount they give you when you renew your policy. If you don’t make any claims in the first year, you can get a 20% discount on your premium. And if you keep not making claims for five years in a row, this discount can go up to 50%!
But here is the catch: if you make just one claim in a year, you will lose the whole NCB benefit and have to start again from the beginning with no discount. So, the longer you can go without making a claim, the bigger the discount you can enjoy when renewing your insurance. Also, if you change your insurer, then you can transfer your accumulated NCB to your new car insurance.
Add-on covers are extra features that you can opt for to enhance your coverage and benefits under your car insurance policy. Some of the standard add-on covers are
- Zero Depreciation Cover: This cover waives off the depreciation factor while settling your claim and pays you the full value of the parts replaced or repaired without any deduction.
- Engine Protect Cover: This cover protects your engine and its parts from damages caused by water ingress, leakage of lubricants, hydrostatic lock, etc.
- Roadside Assistance Cover: This cover provides 24×7 emergency assistance services such as towing, fuel delivery, flat tyre change, battery jump-start, etc., in case of a breakdown or accident.
Note that add-on covers come at an extra cost and increase your premium amount accordingly. Also, these add-ons are a major point of difference between comprehensive and third party insurance. Add-ons can be bought with comprehensive insurance only.
Location of Registration
The location where you register your car also affects your premium amount. The insurance companies have divided the geographical zones into Zone A and Zone B. Zone A includes metro cities like Delhi, Mumbai, Chennai, Bengaluru, etc. In contrast, Zone B consists of the rest of India. The premium for Zone A is higher than Zone B because of the higher traffic density, accident risk, theft rate, etc., in these cities.
Age and Driving Experience
Your age and driving experience also influence your premium amount. Younger drivers (below 25 years) are considered more prone to accidents and rash driving than older drivers (above 25 years). Similarly, drivers with less driving experience (below five years) are considered more risky than drivers with more driving experience (above five years). Therefore, younger and inexperienced drivers must pay higher premiums than older and experienced drivers.
Installing an anti-theft tool in your four-wheeler can reduce your premium amount, lowering the chances of your vehicle being stolen. However, the anti-theft devices must be approved by the Automotive Research Association of India, and you must provide a certificate of installation to your insurer to get the discount. The discount can range from 2.5% to 5% of the own-damage premium.
It is the amount you agree to pay from your pocket at the time of claim settlement. It is over and above the compulsory deductible fixed by IRDAI, and every policyholder must pay it. Opting for a higher voluntary deductible can lower your premium amount as you share the risk with your insurer. However, you may choose a voluntary deductible you can afford to pay in case of a claim.
Car insurance online premiums are not fixed and can vary depending on various factors that we have discussed above. By understanding these factors, you can make an informed decision and choose a car insurance policy that suits your needs and budget. You can also compare different car insurance plans online and get the best deal for your car. Before finalising your new car insurance plan, run thorough car insurance online research, to choose the one that best suits your needs and budget.