When a car comes out of the showroom, the vehicle will be insured by the dealer in most cases as it comes as a package while purchasing the car. If you observe carefully, the insured amount is not just a random number that is thrown on the paper, it is actually a well thought out detailed calculations that covers all the uncertainties of the future, and provides a complete bumper to bumper cover for your new vehicle. These auto insurers before deciding the value of the insurance collect a detailed report about the owner and his/her background to decide the premium amount. Your previous driving record, insurance claims if any, etc. will be taken to account for premium calculation.
There are two types of insurance one can own, a mandatory third-party insurance, which covers the damage done by the insured vehicle to the third-party person or property; Comprehensive policy covers both third-party liability and own damage along with some benefits. Many of the owners purchase both the policies for safety purpose, but few opt only for third-party cover because it costs less and the premium amount is very low compared to the comprehensive policy. Owning a insurance is mandatory under the law of Motor Vehicle act, 1988.
There are several other factors that affect the calculation of the premium amount while purchasing or the subsequent years of renewal of the policy. It is important to know the factors that affect the premium. This will help you in deciding the best deal for insurance purchase.
Factors That Influence Your Car Insurance Premium;
- Geographical location: The location of your residence directly impacts your premium and the length of coverage of the policy. Insurers have classified the premium amount based on different locations and the risk involved in driving in those cities. Metro cities have higher insurance premium due to the number of population, traffic on the road and the probability of accidents. Whereas driving in a regular city with less population and where the risk is lower for driving, accidents and vandalism, you will pay 3 to 5% lower premium.
- Age of the car: In case of renewal of your policy, age of the car or year of manufacturing is highly vital. The insurance company will inspect your car at the time of renewal and decide the premium based on its use, wear and tear, performance, etc. The depreciation value will also be considered by the insurer if you do not you have zero-depreciation cover.
- Driving record: Your driving record is a mirror of your experience with driving a car. Insurers believe that if you are a teenager or young to be driving, you are more prone to accidents and risks. And if the insured vehicle has been claimed more than once in a policy year, the premium amount will be that much higher. The safer you drive, without violating traffic rules you will be eligible for better rates and driver discount. So it is use full if you have a good driving record
- Brand and Engine: There is no doubt that if you have bought a luxury car like Audi, Benz or Jaguar, you will pay the same amount of insurance that a non-luxury car owners would pay. The manufacturer of your car and brand is one of the most vital part of insurance premium calculation. The value of your car will also determine the length of coverage and the insurance type that you require.
- Car accessories and customization: Customisation and extra accessories are not covered under motor insurance. Roof railings, stickers, extra bumper fittings, etc. are not covered under the policy. But if you wish to insure these items as well then get them fixed by the dealer at the time of purchase, they will add the cost of these items along with the price of the car. You will get a higher Insured Declared Value by the insurer by doing so, but please note that your insurance premium will also increase.
How to Reduce Car Insurance Premium?
Here are few tips that might help you to know on ways to reduce car insurance premium;
- Utilise No-Claim Bonus that is accumulated in every claim free year
- If you are a member of Automobile Association of India (AAI), you are eligible for discount by the insurer.
- Install safety devices like anti-theft device, a navigation device, etc. in your vehicle
- Do not buy a vehicle which exceeds your limit, because this means you will be paying higher premium in coming years.
- Choose the limit for voluntary deductibles at the time of insurance purchase.
- Do not buy any add-on covers if it’s not necessary
Importance of Insurance Premium Calculator?
The modern era that we live in demands everything to be easy and hassle-free, this is why we have a number of technologically advanced systems and machines that make our life easier. Car Insurance Premium Calculator is also one such technologically sophisticated program to help car owners calculate their premiums instantly.
As having a car insurance is mandatory in India, it is vital that you as a car owner buy an insurance that covers all your insurance requirements and protects you from any future liabilities. Due to the increasing demands for online purchase of insurance, most of the insurers now have online websites where you can buy or renew a car insurance policy online. These websites have a special tool to calculate your car insurance premium based on the data you provide for the specified parameters. It is important to compare different quotes by the insurers to gauge which insurer provides you the maximum cover with less premium and the factors that influence the premium calculation.
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