There are times when despite owning the same vehicle and having the identical parameters, your friend next door and you pay different amounts for your respective car insurance premiums. Now, you must be wondering why? This article will help you in understanding what the factors are that affect your car insurance premium.
Not just one but many factors are considered while calculating your car insurance premium, particularly at the end of auto insurance providers. Two of the most important factors are your Voluntary Deductibles and making a decision for a low insurance coverage.
Apart from these two factors, your auto insurance premium is affected by various other factors as well. Knowing such factors can be very helpful for you to make a wise decision.
Below mentioned are 5 significant factors that affect your auto insurance premium:
1. Geographical Location
Your area of residence reflects your lifestyle since you share a direct relationship with the location. The city of your vehicle registration influences the premium you will have to pay for your auto insurance. Insurance providers have classified various locations across the nation as the 'Insurance Zones' basis the automobile’s exposure to the risk associated with your location.
Generally, these zones are the metro cities along with the rest of India. In metro cities, there is a high rate of accidents and vandalism. In case you are residing in a metro city, then you will have to pay a higher premium for your car insurance as compared to someone who is living in a less developed and lesser populated city.
For example, if you purchase an auto insurance plan with zero depreciation add-on for your brand new car in a semi-urban locality, you would have to pay 3 percent to 5 percent less as compared to purchasing the exact plan in a metro.
2. Kind of Insurance Cover
There are two types of car insurance plans - third-party car insurance and comprehensive car insurance. In the former, the coverage is applicable only for the damages caused to a third party involved in any road mishap. It doesn’t provide any insurance coverage to vehicle owner/driver or the insured vehicle.
In the latter, the insurance coverage is provided for the damages done to both the parties involved in any road mishap, including your own automobile.
There are people who go for the third-party insurance coverage, as its premium is lower when compared to that of a comprehensive insurance plan. For instance, for a new Hyundai i10 GLS Asta, the third-party insurance premium would cost somewhere between Rupees 3,200 to Rupees 3,500. The insurance premium for a comprehensive policy for the same four-wheeler would cost somewhere around Rupees 10,000 to Rupees 15,000. The specific calculation depends upon the add-on riders you opt for.
Compare Car Insurance on PolicyBazaar.com in Just 3 Minutes & Save Big
You may like to Read: Comprehensive Vs Third Party Car Insurance
Not just one but many factors are considered while calculating your car insurance premium, particularly at the end of auto insurance providers. Two of the most important factors are your Voluntary Deductibles and making a decision for a low insurance coverage.
Apart from these two factors, your auto insurance premium is affected by various other factors as well. Knowing such factors can be very helpful for you to make a wise decision.
Below mentioned are 5 significant factors that affect your auto insurance premium:
1. Geographical Location
Your area of residence reflects your lifestyle since you share a direct relationship with the location. The city of your vehicle registration influences the premium you will have to pay for your auto insurance. Insurance providers have classified various locations across the nation as the 'Insurance Zones' basis the automobile’s exposure to the risk associated with your location.
Generally, these zones are the metro cities along with the rest of India. In metro cities, there is a high rate of accidents and vandalism. In case you are residing in a metro city, then you will have to pay a higher premium for your car insurance as compared to someone who is living in a less developed and lesser populated city.
For example, if you purchase an auto insurance plan with zero depreciation add-on for your brand new car in a semi-urban locality, you would have to pay 3 percent to 5 percent less as compared to purchasing the exact plan in a metro.
2. Kind of Insurance Cover
There are two types of car insurance plans - third-party car insurance and comprehensive car insurance. In the former, the coverage is applicable only for the damages caused to a third party involved in any road mishap. It doesn’t provide any insurance coverage to vehicle owner/driver or the insured vehicle.
In the latter, the insurance coverage is provided for the damages done to both the parties involved in any road mishap, including your own automobile.
There are people who go for the third-party insurance coverage, as its premium is lower when compared to that of a comprehensive insurance plan. For instance, for a new Hyundai i10 GLS Asta, the third-party insurance premium would cost somewhere between Rupees 3,200 to Rupees 3,500. The insurance premium for a comprehensive policy for the same four-wheeler would cost somewhere around Rupees 10,000 to Rupees 15,000. The specific calculation depends upon the add-on riders you opt for.
Compare Car Insurance on PolicyBazaar.com in Just 3 Minutes & Save Big
You may like to Read: Comprehensive Vs Third Party Car Insurance
3. The Type of Engine
The vehicle insurance premium is calculated on the basis of two elements - third-party coverage and own damage coverage. The calculation of third-party cover is based on the cubic capacity (cc) of your vehicle’s engine. The computation of own damage cover is based directly on the Insured Declared Value of your vehicle. In simple terms, the insurance premium amount for a 1000 CC engine vehicle would be lesser than that of a vehicle with 1500 CC engine.
4. Extra Layers of Security
You brought an insurance plan in order to safeguard your vehicle from the possible risks. If your vehicle is equipped with security devices, such as gear lock, handle lock, airbags, GPS tracking device etc., the risk of your vehicle being stolen decreases drastically. Insurance providers consider your efforts towards ensuring the security of your car while calculating the insurance premium. It might offer you a discount on the own damage premium.
Keep in mind that this discount would apply if the installed security equipment is authenticated by the Automotive Research Association of India.
5. Car Modification
Generally, car accessories like roof rails, spoilers etc. aren’t covered in the car insurance plans. In case you want insurance coverage for that as well, get it installed by your car dealer when you purchase it. Your car dealer would include the charges of such accessories in the price of your vehicle. It would be helpful for you in order to get a high Insured Declared Value from your insurance provider.
At the same time, keep in mind that it would hike your car insurance premium.
A car insurance plan is for a specific duration; it’s recommended to do a research about these 5 important factors that affect your car insurance coverage before you finalize an insurance plan for your car.
The vehicle insurance premium is calculated on the basis of two elements - third-party coverage and own damage coverage. The calculation of third-party cover is based on the cubic capacity (cc) of your vehicle’s engine. The computation of own damage cover is based directly on the Insured Declared Value of your vehicle. In simple terms, the insurance premium amount for a 1000 CC engine vehicle would be lesser than that of a vehicle with 1500 CC engine.
4. Extra Layers of Security
You brought an insurance plan in order to safeguard your vehicle from the possible risks. If your vehicle is equipped with security devices, such as gear lock, handle lock, airbags, GPS tracking device etc., the risk of your vehicle being stolen decreases drastically. Insurance providers consider your efforts towards ensuring the security of your car while calculating the insurance premium. It might offer you a discount on the own damage premium.
Keep in mind that this discount would apply if the installed security equipment is authenticated by the Automotive Research Association of India.
5. Car Modification
Generally, car accessories like roof rails, spoilers etc. aren’t covered in the car insurance plans. In case you want insurance coverage for that as well, get it installed by your car dealer when you purchase it. Your car dealer would include the charges of such accessories in the price of your vehicle. It would be helpful for you in order to get a high Insured Declared Value from your insurance provider.
At the same time, keep in mind that it would hike your car insurance premium.
A car insurance plan is for a specific duration; it’s recommended to do a research about these 5 important factors that affect your car insurance coverage before you finalize an insurance plan for your car.