February 27, 2024
8 Factors That Define Your Car Insurance Premium

8 Factors That Define Your Car Insurance Premium

If you are a car owner, you would know that third-party car insurance is mandatory in India. However, third-party coverage may not be sufficient as it does not cover damages to your car. A comprehensive policy that covers own-damage and other benefits may be a better option. Since you get higher coverage and benefits, the premium of such a car policy can be higher as well. Apart from the coverage, there are many other factors that affect the premium of a comprehensive plan. Knowing these factors is important as it can help you choose the right and cost-effective policy. with that in mind, here are 8 factors that affect your car insurance premium:

  1. Car Variant

The general make and model of the car, its type, the size of its engine, and other factors directly affect its premium. For example, a luxury sedan’s premium is higher than a hatchback’s. These factors can ascertain the car insurance renewal premium.

  1. How Old the Car Is

Two very important and linked ideas about car insurance are affected by how old the car is. Depreciation is when the value of an object goes down over time because of normal wear and tear. The IDV or the Insured Declared Value is the maximum sum insured fixed by the insurer, provided on theft or total loss of the insured vehicle. Most of the time, an old car will have more decline and less IDV. It means it will cost less to insure an old car and more to insure a new one.

  1. Deductibles

When the policyholder chooses a voluntary deductible, they give a set amount to the total claim amount. It lowers the insurance premium. So, the insurance company pays less to settle a claim and can charge a lower rate.

  1. The Type of Insurance

As mentioned earlier, it is mandatory to have car insurance that provides third-party coverage. The own damage part of the coverage, on the other hand, is not mandatory. The third-party cover provides help in case of damages to other cars or property or even injury to individual/s. Thus, its premiums may be relatively lower.

A comprehensive car insurance package protects your car against the damages it may incur in different scenarios. Add-ons can also be used to enhance the coverage of the comprehensive plan. Hence, such a plan’s premium can be comparatively higher. To get an idea of the premium of such a plan, you can use a four-wheeler insurance premium calculator.

  1. Add-ons That Can Be Bought

Add-ons provide more protection but at an extra premium. Some popular add-ons are engine protection cover, zero depreciation, roadside assistance cover, etc. Out of so many options, it is not necessary that you select all. You should only opt for those which you think are essential for your car.

  1. NCB Or No Claim Bonus

NCB is a feature where your car insurance provider may reduce your premiums to a certain degree if you did not make any claims during the last policy tenure. Having NCB benefits can considerably reduce your premiums. Hence, the NCB component (if it applies) must always be considered.

  1. Anti-Theft Device 

An anti-theft device approved by the Automotive Research Association of India (ARAI) could also get you a lower car insurance premium.*

  1. Coverage Area

Getting a car policy in a metro can cost more than insuring a car in a tier-3 city. This is because cars are more likely to get damaged in an urban setting, where traffic makes accidents more likely.

Get insured anytime, anywhere! Check out the Bajaj Allianz General Insurance website to learn more and download the app now.

*Standard T&C Apply

## All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply

‘Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.‘

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