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Car Insurance Premiums Are Influenced By A Number Of Factors.

Written by Saad Ahmad
Updated On Oct 18, 20232 min read

Know how your car insurance premium is affected by a variety of factors!

The amount you pay to receive insurance coverage for your automobile is referred to as a car insurance premium. There are two types of automobile insurance plans based on insurance coverage: third-party car insurance and comprehensive car insurance. The premium amount for each type is different since the premium amount is determined by the coverage given. Aside from coverage, there are a number of additional factors that influence auto insurance rates. Let's take a closer look at each of these characteristics one by one.

 Car Insurance Premiums Are Influenced By A Number Of Factors.

Car Insurance Premiums and the Factors That Influence Them

Here are some elements that impact your auto insurance rate and that you should be aware of in order to make the best decision when purchasing or renewing your policy:

  • Car Make, Model, and Variant

A car's make relates to the name of the manufacturer (brand), model to the name of the brand's many segmentations, and variant/version to the specific label used to identify the automobile. Take the Mahindra XUV300 W4, for example. Mahindra is the brand name, XUV300 is the model name, and W4 is one of the versions. The cost of automobile insurance varies depending on the kind of MMV.

  • Source of Energy

The kind of fuel an automobile uses, such as petrol, diesel, CNG, LPG, and electric engines, affects the cost of car insurance. CNG premiums are often increased by Rs. 60, plus additional fees for third-party insurance. The premium price for comprehensive coverage varies depending on whether the CNG kit is installed outside or within.

  • Cubic Capacity (cc) of the Engine

An automobile insurance policy's premium is also determined by the engine's capacity. The engine capacity and the premium amount have a direct relationship: the bigger the capacity, the higher the premium, and vice versa.

  • Zone: RTO (Regional Transport Office)

The location of the RTO where the automobile is registered affects the cost of car insurance. RTOs in India are separated into two categories: Zone A and Zone B. Zone A covers Delhi, Mumbai, Pune, Chennai, Kolkata, Hyderabad, Bangalore, and Ahmedabad, whereas Zone B covers the remainder of the country.

  • Vehicle's Age

The cost of comprehensive coverage is also determined by the car's age. An insurance company's Insured Declared Value (IDV) for an old or aged automobile is lower than that of a new car. Because of the depreciation loss incurred by the automobile, the IDV is affected by its age. As a result, the premium for used automobiles is smaller than for new cars.

  • Age, Occupation, and Driving History of the Owner

Several automobile insurance firms give a discount to customers of a specified age range on their premiums. For example, if the policyholder is between the ages of 35 and 45 and is a seasoned driver, an insurance company may give a discount on the comprehensive policy's Own-Damage (OD) cost.

  • Bonus with no Claim (NCB)

Insurance companies reward their clients with a discount known as a No Claim Bonus if they do not file a claim during the insurance year. The benefit grows with each year of no claims, allowing you to save more money on your vehicle insurance cost when it comes time to renew. To receive a true picture of your premium, you should verify the NCB component of the policy when acquiring a plan and when renewing it.

Take Away

These are some of the most important aspects that influence the cost of a vehicle insurance policy's premium. When purchasing an insurance policy, the policyholder should always provide genuine and accurate information regarding these variables. False statements regarding them can result in significant penalties, plan termination, and other consequences.

Also read - Simple Manner To Compare Car Insurance Quotes


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.
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Written by Saad Ahmad
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 Saad is a marketing guru and has some exciting knowledge to share about the motor and related industry. Saad in his last work with a major Indian yet global conglomerate has made direct contributions to the Insurance sector. In his free time, Saad likes to play badminton and listen to melancholic music

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