Top 10 Factors That Impact Car Insurance Premium In India | RenewBuy

Top 10 Factors That Impact Car Insurance Premium In India

Owning a car in India has become more of a necessity rather than a luxury. Whether it is for your personal use or commercial use, having a car is the need of the hour. When you invest in a car, you also need to shell out money for your vehicle insurance not just because it is mandatory but also because it is an excellent way to protect yourself as well as your vehicle.

The market is inundated with a number of car insurance policies, and it sure can become a difficult task in selecting the right one for your car. The amount of premium that you have to pay for your car insurance policy depends upon a number of factors. In this post, you would be learning about the top 10 factors that impact car insurance premium in India.

IDV (Insured Declared Value)

With policy being purchased online, you have an option to choose your Car’s IDV. Higher the IDV higher will be the premium.

Vehicle Manufacturer

The manufacturer of your car is another factor that can determine your premium. Insurance companies decide on the premium depending upon the ratio of claims made by different brands. The class of your vehicle matters too. An SUV would comparatively have a higher premium than a hatchback.

Usage Type of Vehicle

The next factor would be the usage of the vehicle – whether it is for personal or commercial use. A commercial purpose car will come with a higher premium.

Safety Features

To avail a good discount or lower premium, for example if you have an anti-theft system or car lock few insurer may offer your discount. Ensure that your car comes or have safety devices which fall under the list provided by the Automobile Research Association of India (ARAI).

Age and Engine Capacity

The age of your vehicle, as well as the capacity of the engine (cubic capacity), are two other factors. A car with a powerful engine would be charged with higher premium and similarly new vehicle would have a higher premium (as IDV would be higher).


The place where you live also plays a significant role in determining your premium amount. People who purchase vehicles in metro cities or accident/theft prone areas would end up paying a higher premium.

Add-on Covers

The premium amount also depends upon the add-on covers you select. The more coverage options you choose, higher the premium you pay.

Fuel Type

Just like how the make and engine of the vehicle matters, the fuel type (petrol, LPG, diesel, etc.) of the car is also an important factor.

Claim taken

The last factor in our list which helps in determining the car insurance premium is your claim status. If you have taken a claim on your car recently your NCB (no claim bonus) reduces to zero (if claim is taken last year) and you end up paying more premium.

So the next time you purchase a car insurance, you would know how your premium amount gets determined.

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