How Is The Car Insurance Premium Calculated In India?

Whether you are planning to buy an insurance policy or looking to renew your old insurance policy, it is natural that you would be looking at the premium rates offered by existing insurance companies. Most people compare car insurance online in India to have a vague idea of the available insurance policies available at different premium rates. When car owners compare car insurance online in India, they realise that different insurers charge different rates.

How Is The Car Insurance Premium Calculated In India?

But, have you ever wondered the factors that insurance companies take into purview before evaluating your car insurance premium? Following listed are the factors that determine and differentiate premiums paid on new car insurance or during renewals of old or existing policies:

  • Insured Declared Value (IDV): This is the maximum value that the insured can claim from the insurer in case of damage caused due to damage from accidents or natural calamities;
  • Price and Age of The Car: Expensive cars beget increased premium rates. This because expensive cars contain expensive spare parts and rare modifications, thus, resulting in increased costs of repairs and maintenance, if damaged. Also, age of the car is another important factor that cannot be ignored. People looking to insure their old cars have to pay a greater amount of premium;
  • Engine Capacity of The Car: More the engine capacity or the cubic capacity of the vehicle, greater is the amount of premium payable;
  • Car Accessories: Car accessories that are fitted into the car to enhance its beauty and performance are costly, and hence, need to be insured against possible damage. Insuring these accessories invites extra premium payment.
  • Voluntary Deductibles: This is a part of the claim that the policyholder takes upon himself or herself to pay before raising an insurance claim to the insurance company. After taking into account risk factors and the extent to which the policyholder is ready to pay for the repairs in case of damage, the amount of voluntary deductible is chosen. The insurer offers discounts in premium payments if the policyholder chooses a higher amount of voluntary deductible.

Also Read: Want to know why insurer deducting some amount from car insurance claim

  • No-Claim Bonuses: This factor applies to those looking to renew their car insurance premium. Policyholders planning to renew their existing car insurance benefit from the discounts for not claiming any amount of car insurance during the policy period. This can be described as a reward that the insurer gives to the insured for a claim-free year and can vary within 10-50 percent. This can also be transferred while buying insurance for another car or a different policy.

            Exercise Prudence before Buying Motor Insurance Online:

The cover obtained from car insurance plans shield the owner from losses resulting from damages caused due to potential accidents or natural disasters. This means that one must not only compare for available premium rates, but also the benefits inherent to each policy. While comparing car insurance online in India, car owners must read carefully the details given in fine print including the amount charged by the insurer against third-party liability cover, own damage cover and personal accident cover.

         Most people would find it tedious to calculate premium rates corresponding to the extent of coverage they are looking for. Hence, it is advisable to use the online car insurance premium calculator while looking for motor insurance online to evaluate the amount of premium payable.

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