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Elements that Affect Car Insurance Premium

Published On Jan 07, 2022

Car Insurance Premiums and the Factors That Influence Them

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.

 Elements that Affect Car Insurance Premium

Car Insurance Premiums and the Factors That Influence Them

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. Driving Directions

The premium amount will be greater if the driving location is in an accident-prone area or a congested metropolis. As a result, automobile owners in metro cities like Mumbai, Delhi, Chennai, and Kolkata must pay a greater premium than those in smaller cities.

When determining the premium amount, the policyholder's occupation is also taken into account. Doctors, chartered accountants, and defense personnel are entitled to a reduction in their premiums, according to IRDAI criteria. NCB is applied to the policy's own-damage premium, resulting in a lower vehicle insurance rate.

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.

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