Factors That Influence Car Insurance Premium

The premium a policyholder pays for his insurance policy is for the assurance that the insurance company will pay in certain circumstances. Insurance underwriters assess the risk of an insurance company to determine how much insurance premium must be charged for life insurance, health insurance and for car insurance premium based on a range of varied parameters.

The car insurance calculator takes several aspects into consideration when deciding what premium the insurance company will charge.

Your Location and Registration Decides the Car Insurance Premium

For purposes of calculating car insurance premium in India, the registration of the covered vehicle is relevant. A vehicle registered in Zone A – which refers to metro cities such as Mumbai, Delhi, Chennai, Kolkata, Pune, Ahmedabad, Hyderabad and Bangalore – will attract higher premium whereas Zone B (rest of India) vehicles attract lower premiums. Since the perceived threat of theft, accident and vandalism is lower in smaller towns and rural areas than in bigger, busier cities, vehicle owners in Zone B pay lower insurance premiums.

Car Insurance Renewal

The car insurance premium you pay will also depend upon whether you are buying insurance for a new vehicle or whether you are renewing an existing policy. The renewal payment payable will depend upon whether a claim was made during the preceding year, the condition of the car and other aspects. A no-claims bonus means lower premiums at the time of renewal.

Cubic Capacity (CC), Car Make, Model and Variant

The value of the car decides the premium payable. This in turn is determined by the cubic capacity and type of engine, the car variant (basic or high end) and the year of manufacture. Typically insurance of diesel cars is more expensive than petrol cars. CNG vehicles also attract higher premiums.

Age of Vehicle

If you use a car insurance calculator to buy or renew your car insurance online, you will find that the age of a vehicle is relevant to decide the premium amount. The age of the car is inversely proportional to premium charged. The older the car, the lower is the premium.

Purpose for which the Policyholder will use the Vehicle

Whether the vehicle is going to be used for personal or commercial purposes is also relevant when using a car insurance calculator. A commercial vehicle will run much more, suffer greater wear and tear and may be more likely to be involved in an accident; hence may attract higher insurance premiums.

Type of Policy and Optional Riders

A basic third-party insurance policy will typically have the lowest car insurance premium while comprehensive policies will be more expensive. The optional riders that a policyholder opts for will also directly impact premiums payable. Adding optional riders such as accident cover, coverage for accessories, roadside assistance will also mean higher premiums.

Safety Features/Devices

Anti-theft devices and other security features that make it difficult to steal a car will also help to lower the premium payable. While some of the factors that impact car insurance premium may be out of one's control, there are some factors within the policyholder’s control. Keeping the car in good repair and regularly having it serviced, being a careful and responsible driver are factors that help you, as the policyholder enjoy a trouble-free driving experience and possibly lower premiums as well.