Knowledge of any backend process can give you insights regarding what appears on the front. This concept holds true while calculating car insurance premium as well. An insurance company arrives at a car insurance quote after considering several factors. Read ahead to know 10 factors that affect your car insurance premium so that you are in a better position to choose an insurer and a car insurance policy.
The cubic capacity of your car’s engine is the base to calculate car insurance premium. Insurance Regulatory and Development Authority of India (IRDAI) states Third-party Liability insurance policy’s rates based on the cubic capacity of a vehicle. The insurance company then uses its own algorithm to charge a price for its comprehensive plan.
This is where the variant of your car comes in the picture. Whether you drive a petrol, diesel, or CNG car, has a direct impact on your car insurance premium.
As the vehicle ages, its Insured Declared Value (IDV) reduces. IDV is the amount you shall receive from the insurer in case the vehicle faces total loss. This reduction in value is due to natural wear and tear. In accounting terminology, this is termed as Depreciation. Thus, it is natural that the cost of insuring a vehicle also goes down as its value reduces.
Location
Driving a car in a Metro city is considered to be riskier as the chances of unpredictable events such as an accident or theft are on the higher side. If you ride a car in a Metro city, you are bound to pay more money to insure your car as compared to driving in a tier 3 city.
If you have a bad driving history, your insurance company might hike up your car insurance premium. You miss out on the No Claim Bonus (NCB) on policy renewal as well if you raise a claim during the previous policy period. No Claim Bonus is a discount offered by the insurance company for not raising a claim. It can go up to 50% if you haven’t raised a claim for five consecutive years. That is why policyholders refrain from raising claims for trivial issues and prefer to sort it themselves as it affects their NCB. Note that if you raise a claim, your NCB is reset to zero.
It is not enough to purchase car insurance once. You need to renew it from time-to-time. It is best to renew your car insurance policy before its expiry date. If you fail to do so, and try to renew it after some time has elapsed after the expiry date, the policy will be considered as a Break-In policy. In such a case, the insurer might want to have a look at your car before insuring it by scheduling an inspection. This might increase your car insurance quote. Also, if you do not renew your car insurance policy within 90 days of its expiry, your No Claim Bonus will be reset to zero.
In case of a claim, there is a certain amount that you have to pay from your side. This amount is termed as compulsory deductible. You have the option of choosing a voluntary deductible as well. This will reduce your insurance premium; as you are in a way, telling the insurance company that you are willing to share a sizeable part of the cost to repair the damages of the insured car. It is not an ideal practice to go for a voluntary deductible as it can result in lower claim settlement amount.
Have you protected your vehicle with an anti-theft device? This reduces the chances of car theft. Installing anti-theft devices certified by Automotive Research Association of India can reduce your insurance premium.
If you have a Comprehensive car insurance policy with a lot of Add-on covers, it is going to cost a lot. Therefore, it is necessary to choose only those Add-on covers or riders that are suitable for you.
The last but not the least factor affecting your car insurance premium is your insurance company. Nowadays, digital-first insurance companies offer low-priced car insurance policies. They also provide additional discounts on their policies based on certain offers. Therefore, it is wise to conduct a basic research by visiting insurer’s websites before purchasing a policy.
You do not have to depend on any expert for car insurance quotes. Calculate car insurance premium by simply visiting digital-first insurance company’s websites. Their user-journeys are so simple that you will be able to know your insurance quote in just a few clicks.
Make sure to make an informed purchase decision and stay insured.
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