Important Factors Which Affect Car Insurance Premium


A new car or upgrading to a better model is a joyous occasion that is accompanied by a sense of pride and accomplishment. With the utility and comfort that the vehicle provides, it can become an essential part of your daily life. Maintaining the car in good condition is therefore crucial. Furthermore, with the high number of accidents and vehicle thefts all over, it is also important that you are financially prepared for any unfortunate incident that might harm or damage your car.

It is mandatory in India to have Third Party Liability car insurance coverage, but having a comprehensive policy – which covers third-party as well as own-damage insurance coverage – is a better idea. A good comprehensive policy will have you covered not only from losses arising out of car theft and accidents, but also in case of damages due to natural disasters like floods and earthquakes.

Cost of Car Insurance – Premium

In spite of all the benefits of a car insurance policy, the premiums can be very expensive. If you understand how an insurance premium is calculated, you can save some money when buying an insurance policy for your vehicle.

Car insurance premiums are affected by a variety of factors. Although some of these may be beyond your control, you can manage some of the others to reduce the overall cost. Let’s take a look at the important factors affecting your auto insurance premium:

Car Model, Engine, and Age

Make and model of the car are two of the most important factors affecting your car insurance premiums. An insurance company calculates the premium amount by considering everything from the type and capacity of the engine to the model of the car. The most important factor is the cost of the car.

The Insured Declared Value (IDV) of the vehicle is also considered by insurance companies. This is the maximum amount that the insurance company pays to you in case of theft of the car, or in case of total loss due to damages. New vehicles have a higher IDV and accordingly a higher premium. The IDV, and the premium decreases year-on-year with the market value and the usage of the vehicle. So, the age of your car is a major factor that determines the insurance premium.

Driving Record

The driving history of an individual has a significant impact on the premium charged. If you have a history of car accidents, frequent claims, rash driving, a police record, etc., then an insurance company can consider all of that and charge you a higher premium. This is because bad driving history reflects the amount of risk involved in insuring your car. If you want to lower your premium amount, you can take membership of certified automobile associations that promote road safety as some leading insurers offer a discount to members of these organizations.

When you are a diligent driver and do not make any insurance claims during a policy year, your own-damage premium in your insurance for the next policy year can go down as you earn a No Claim Bonus. Own-damage car insurance premiums can be reduced by up to 50% if you use this feature.

Credit Score

Credit score is another factor that determines the amount of premium you pay on a car insurance policy. When you apply for car insurance, the company analyzes your credit score in order to determine your history of timely bill and loan payments. A person with a good credit score has to pay a lower premium than a person with a bad credit history. Thus, if you have a poor credit score, you can improve it over time and benefit from a lower premium when you renew the policy.

Geographic Location

Location is also an important factor that insurance companies consider when calculating the premium. People living in metropolitan cities with dense traffic conditions have to pay a higher premium as compared to people living in small towns. Also, cars registered in cities that are more prone to accidents and car thefts are charged a higher premium by insurance companies.

Car Safety Fittings

Not many people are aware of this but if your car has safety features and devices such as airbags, anti-theft devices, advanced security locks, etc., then you are considered less risky for insurance companies and will have to pay a relatively lower premium. In fact, if the anti-theft device installed in your car is approved by ARAI (Automotive Research Association of India) then you are entitled to a discount of 2.5% or Rs 500 on the Own Damage (OD) premium component.

How to Choose a Car Insurance Policy

While you work on some of these factors to get a good deal, it is also important that you choose the right car insurance service-provider that have a superior track-record when it comes to claim settlement and customer service. Finserv MARKETS, through its tie-ups with leading insurance companies, makes that shortlisting of a service-provider easier and hassle-free for you. The platform lets you compare between different policies offered by some of the best insurers in the country and helps you pick the right car insurance plan suitable for your needs.

You can take advantage of the car insurance calculators that allows you to calculate the premium for your car’s insurance and lets you compare insurance quotes offered by various insurance providers in India. This will help you to make an informed choice to get the best car insurance policy that meets all your requirements.

Summing it up, a car insurance plan can carry you smoothly through many unforeseen situations and there are many factors that can affect the premium of your car insurance. Getting the best car insurance right from the comfort of your home has never been easier before. Log on to Insurance Policy Website or App and get the best insurance policy for your car, today.

You might also like
Leave A Reply

Your email address will not be published.