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What all Factors are Considered by Car Insurance Companies to Determine Premiums?

Published On Jul 01, 2021 10:00 AM By InsuranceDekho

There are various factors that can affect the amount of premium you pay towards your car insurance plan. Read the article to know about some of these factors in detail.

It is necessary to have a car insurance plan in order to drive legally on the roads in India. However, it does not mean that you need to drill holes in your pocket each time you get your car insured. By knowing the factors that can impact your car insurance premium, you can possibly turn the table to your side. And, ultimately by doing this you can buy an affordable car insurance plan for yourself without needing to compromise on the coverage.

What all Factors are Considered by Car Insurance Companies to Determine Premiums?

Factors that can Affect Your Car Insurance Premium

Listed below are a few factors that can cause an impact on your car insurance premium:

  • Model, Make and Variant

The premium paid towards insuring an Audi would be on a higher-end in comparison to a Maruti. This is due to the basic components of a vehicle. This is the reason why a car insurance premium is affected due to factors like car’s manufacturer, engine cc, type, etc.

  • Location

If you are looking forward to getting your car insured in a metro city then it is going to cost you more in comparison to insuring it in a small town. This is due to the fact that in urban settings, a car is prone to face more damages due to reasons like busy traffic, narrow roads, etc.

  • Age

The age of the vehicle affects the insurance premium due to two main concepts i.e. Insured Declared Value and Depreciation. Generally, an old vehicle would have less IDV and more depreciation. It simply means that the cost incurred to insure an old car would be less in comparison to a new car.

  • Add-Ons

By including add-ons cover to your car insurance plan, you can increase the coverage. However, to add an add-on cover such as zero depreciation cover, personal belonging cover, passenger cover, etc to the insurance plan, you are required to pay an additional premium amount too. Therefore, it is advisable to opt for only important add-on covers.

  • No Claim Bonus (NCB)

Insurance companies reward the policyholder in the form of giving a discount at the time of renewal for driving the insured car with utmost safety and subsequently for not raising any claims during the previous policy tenure. Therefore, avoid making any small claims and prior to raising any claim ensure to look at the NCB factor (if applicable).

Must Check:- Car Insurance Renewal

  • Deductibles

You can choose to go for a voluntary deductible in order to reduce the amount of your insurance premium. Deductible simply means that the policyholder needs to pay a pre-decided amount from his pocket from the total claim amount. Due to this, an insurance provider needs to pay less at the time of claim settlement, hence, they charge less premium.

  • Anti-Theft Devices

You can get an additional discount from your insurance provider in case you have installed anti-theft devices authorized by the Automotive Research Association of India (ARAI).

Also Read:- Benefits of Car Insurance Premium Calculator

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.

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