5 Key Reasons Why Your Car Insurance Premium Increases Every Year
Published On Jul 05, 2021, Updated On Aug 09, 2021
Read this article to find out why the cost of your car insurance premium increases annually.
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When you decide to invest in a car insurance policy, it is very important to select the one that is suitable for you. However, the cost of your car insurance premium increases annually. This is mainly because, every year, the Insurance Regulatory and Development Authority of India (IRDAI) raises Third-Party insurance premium prices. Since comprehensive car insurance includes Third-Party coverage, premiums will inevitably arise. In this article, you can read about
Why Does Your Car Insurance Premium Go Up Every Year?
Your car insurance price, like the phrase "nothing is permanent," changes every year. The cost of your car insurance premium will change every year at the time of renewal of your policy.
Insurance plans in India are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). Third-party car insurance is required and covers liability for claims made by third parties as a result of accidents. Before increasing premium prices, the IRDAI examines premium rates every year, taking into account the number of claims filed and insurance company loss ratios.
Factors Considered To Increase Car Insurance Premium
The premium for your car insurance changes on a regular basis. However, there are certain factors that are taken into consideration to determine the cost of your car insurance premium. The following are the determinants of the cost of your car insurance premium -
Your Claim History
One of the main reasons can be your claim history. If you have claimed your car insurance in the previous policy year, the insurance company will place a greater risk probability. Thus, your insurance may increase. The rate of increase in your premium also depends on the extent of the damage caused to your car for which you claimed your insurance.
Modifications To Your Car
As your car ages, you will probably prefer to add accessories to your car to enhance its looks and performance. However, these gadgets are considered to pose a risk while driving your car or increase the probability of theft. Thus, your premium is likely to rise if you have installed any modifications to your car that enhance its appeal or performance.
Your residence makes a major impact on the cost of your car insurance premium. If the insurance company finds that you live in a residence that has a high record of accidents or thefts, your premium will be higher as the chances of your car sustaining damage is high.
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Change In Workplace
If you drive your car to your workplace, your car insurance company may base the cost of your car insurance premium depending on the amount of time you spend on the road. A high amount of time on the road is considered to make the drivers and the cars vulnerable to accidents. If you happen to have changed your workplace which needs you to travel a longer distance, you can expect your premium to increase.
Changing The Driver In The Insurance Policy
The prices will also be affected if you add a new driver to your car policy. Some parents are astonished to see their monthly rates climb when a new individual on the coverage is a teen driver. According to research by the National Institutes of Health and the Virginia Transportation Institute, youth experience more crashes in their first six months of driving alone than in their subsequent year of driving. Teens had fewer accidents as they gain experience behind the wheel. Despite this, because teenagers are statistically more likely to be involved in car accidents, they are more expensive to insure.
Purchasing car insurance that provides you with the optimal coverage is more important than a policy that leaves you undercovered at minimal premium costs. Thus, make sure to purchase a car insurance policy that suits your budget and provides the required coverage.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.