Car insurance provides cover to your vehicle against any damage that may occur during an accident. Indian roads are insane and always prone to accidents. So one should not take risk of avoiding insurance. To avoid this risk, the Motor Tribunal of India makes insurance compulsory for all vehicle owners. The car insurance premium is the amount that your insurer charges you for the cover provided. They charge you an annual premium for the cover.
The difference in car insurance premium
But, how car insurance premium differs in cases?
There is a possibility that you and your friend having the same car and the same model pay a different insurance premium. But How come this is possible? This article will tell you some major factors that alter the premium of your car.
Several factors are considered while deciding the car insurance premium. Two of them, which are most important – your deductibles and choice of a low insurance premium.
Not just these two, but many other factors are also affecting the premium.
Factors affecting car insurance premium
- Type of insurance cover- two types of car insurance plans are generally offered – third-party car insurance and comprehensive car insurance. while the third-party insurance covers only for the damages caused to a third party involved in any road accident. It doesn’t cover the vehicle owner/driver of the insured vehicle. The comprehensive insurance provides coverage for the damages that occurred to both the parties involved in any road accident, including your own automobile. Some people opt for third-party insurance coverage, as its premium is lower. For example, for a new Yaris, the third-party insurance premium would cost somewhere between Rupees 4,400 to Rupees 5,000. Whereas, the comprehensive policy for the same vehicle would cost somewhere around Rupees 10,000 to Rupees 13,000. The calculation depends upon the add-ons that you opt for.
- Geographical Location- you share a random relation with the location where you live. It also showcases your lifestyle. There is a direct effect of the city you live on your premium. The insurance companies have classified cities according to the risk factors involved in that city. Generally, these are the metropolitan cities like Delhi and Mumbai. In these cities, the risk rate of accidents and vandalism is very high. The company will charge a higher premium if you are living in a metro city. Whereas they will charge less for those people living in a less developed and lesser populated city.
- The Type of Engine- car insurance premium is calculated considering the two elements – third-party coverage and own damage coverage. Third-party insurance depends on the cubic capacity of the vehicle’s engine. The estimation of damage to self is based directly on the Insured Declared Value of your vehicle. Simply, the insurance premium for an 800 CC engine Maruti 800 would be lesser than that of a Brezza with a 1250 CC engine.
- Extra Layers of Security- You purchased an insurance plan to protect your vehicle from every possible risk. If your vehicle is supplied with high-tech security devices, like gear lock, airbags, GPS tracking device, reverse camera sensors, etc. The risk of your vehicle being stolen decreases automatically. Insurance companies consider your efforts towards securing your car with advanced technology while calculating the insurance premium. As a result, they may offer you a discount based on self-damage premium. Remember that this discount will be applied only if the security equipment is authorized by the Automotive Research Association of India.
- Car Modification- the general insurance plan does not cover some basic car accessories. Like roof rails, spoilers, rims, etc. Ask the car dealer to install them at the time of purchase. Your car dealer will merge the charges of accessories in the vehicle’s cost only.
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