5 things which affect Your Car Insurance Premium

Posted on: Feb 19, 2019 | | Written by:

5 things which affect Your Car Insurance Premium

Published on February 19, 2019. EST READ TIME: 3 minutes

In case of accidents or unfortunate events, you will likely incur a heavy loss or several damages to your vehicle. It is also possible that you incur damage to someone's life. In these cases, it is essential to get a good insurance plan to help protect you from the heavy fees and repair costs. However, several factors are based on which the car insurance premium cost is determined. Let us know more about what a car insurance premium is and the elements based on which it is resolved.

Car Insurance premium is the amount that you pay to your insurer for the cover that they provide you. Widely there are two types of car insurance third party liability cover and comprehensive car insurance cover. Third party liability is a mandatory cover which secures you against third party damages and comprehensive cover for car will protect against accidental damage as well as any liability to a third party property, death of injury person loss.

Every motor insurance company has car insurance premium calculator which lets you calculate your vehicle premium on the basis of the below mentioned factors.

Age of vehicle and model

Age of the vehicle is one of the deciding factors as the premium rate is dependent on it. Similarly, if your vehicle is old the premium amount would be less as the IDV (Insured declared value) would be less as compared to a brand new vehicle. The model of the car plays a significant role. For instance, the premium for luxurious cars is on the higher end compared to the vehicles that fall in the low or medium range of products. The main reason for this is the cost of repair and replacement parts of the car. Moreover, based on the age of the vehicle, the premium is decided. For example, a brand-new and less-used car will need low maintenance. On the other hand, a vehicle that has been used extensively will need more repair and maintenance.

Place of registration

Place of registration is basically the place where the vehicle is being registered with the concerned RTO authorities and premium rate is dependent on it. The place or city of registration contributes to determining the cost of your premium policy. This is based on the number of vehicles and the accident rate in that area. For instance, the rate of accidents in cities and highways is on the higher end, as compared to three-tier cities. Thus, the premium cost for three-tier cities is comparatively lower. Moreover, the cubic capacity of vehicles, the number of cars in a cubic area, helps determine the number of riders. This helps the company to predict the flow of vehicles and the number of accidents. Therefore, the insurance premium for a place with a higher cubic capacity will be higher.

Purpose of the vehicle

Purpose of the vehicle means whether the vehicle is being used for commercial or domestic purpose. Premium is different for a commercial vehicle as compared to that of a private vehicle. Whether using your vehicle for commercial or personal uses, the premium cover cost shall differ. This is determined based on the usability of the vehicle. For instance, commercial vehicles are driven more as compared to private vehicles. Thus, the chances of accidents also increase. Based on this, the premium cost for commercial vehicles is more than for private vehicles. Here is a bonus tip: getting the proper licence and registration certificate from the RTO while applying for the premium is important if you have a commercial vehicle.

IDV

IDV stands for insured declared value. IDV in car insurance is the total value of your vehicle and it is the maximum value which insured would get at the time of total loss, theft or burglary. This figure has the insurance company to understand the current value of your vehicle as per the market. The IDV is the difference between the seller's cost minus the rate of depreciated cost.

NCB

NCB is no claim bonus which is earned for your previous year policy if no claim has been made; you get a discount basis the NCB slab for the current policy. This discount will thus reduce your premium amount. This can help in decreasing car insurance premium. The NCB in car insurance is mainly for those re-applying or extending that existing insurance policy. If you have not applied for any Car insurance claim in the previous year of your insurance policy, you are entitled to a no-claim bonus from your insurance company. Depending on your policy and insurance company, this may range between 20-50%. The no-claim bonus is a discount percentage to you while you renew your premium.

To calculate the premium of your car CLICK HERE

Things that determine the cost of car insurance

Apart from the five things listed above, that is, the age of the vehicle and model, place of registration, the purpose of the vehicle, IDV and NCB, and a few other factors help determine the car insurance premium. Here are some things that you must keep in mind while buying car insurance -

• The premium cost you need to pay is per the inspection of your insurance agent.

• The insurance company you select plays a major role in deciding the amount of your insurance policy.

• The type of insurance policy you opt for also plays a major role.

• Your vehicle's fuel type and value can also affect the cost of your premium coverage.

How to calculate car insurance?

As per the traditional days, you would need to visit the insurance office, where insurance would come to your place to analyze your vehicle's condition. This can become tiresome and may trouble you in the long run. Thus, it is time to switch to an easier and better approach to calculate your car insurance more efficiently. You can easily use the online car insurance calculator tool by HDFC Ergo to get the closest estimation.

In order to use this tool, all you need to do is log on to the official website and check for the car insurance calculated tool. Now, add in all the required details, such as your vehicle number, name of the model, age, etc. You can easily get the best insurance options based on your budget. Moreover, you can also adjust your goals and insurance requirements so that they are adapted as per your requirements.

Conclusion

The most basic car insurance plan is third party insurance that offers minimal protection against damage to property and life by a third party. However, if you are looking for more added benefits or a better coverage plan, then you can either upgrade your existing insurance plan or add in different policies. Factors such as an insurance policy and the configurations of your vehicle, your insurance premium plan, may vary greatly. Thus, it is important to connect with a company that offers the best rates. Get in touch with HDFC Ergo today.

Disclaimer: The above information is for illustrative purpose only.For more details, please refer to policy wordings and prospectus before concluding the sales.

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