A third-party car insurance is compulsory but this does not mean you have to burn a hole in your pocket every time you have to insure your car. By understanding the factors that affect the premium of your car insurance, you can make sure you get the best car insurance deal in the market. This way, you can get an affordable car insurance without the coverage being affected. After all, a penny saved is a penny earned.
Car insurance premium is the amount that you pay on a regular basis to the insurer in exchange for insurance coverage. After you have paid the premium, the insurance company will pay for all the coverages that are mentioned in the insurance policy such as collision and liability coverages.
Insurance companies take a lot of factors into account while setting your car insurance price. Every insurance company’s goal is to balance the amount that is charged with how likely you will need an insurance payout.
Different insurers will ask you to pay your car insurance premiums at different intervals. The most common premium payment options are monthly, quarterly, half-yearly and annually. In certain cases, you may be asked to pay the entire premium up-front. This is common if you are considered to be an at-risk driver. For example, in case you let your insurance lapse previously or you need a Form SR-22.
Luxury cars have higher premiums, as they are more expensive to repair and cost more to replace in case the car is stolen than an affordable car. The difference between model and make of the car is that ‘model’ refers to the specific car model whereas ‘make’ denotes the brand of the car. For example if we take Volkswagen Polo, Volkswagen is the make of the car whereas Polo is the model of the vehicle. The type of fuel that the to-be insured car uses also affects the premium. The premium varies for diesel, petrol and CNG. Cars that have a higher cubic capacity or the ones that run on CNG or gas typically have high premiums.
It is one of the main factors that influence your car insurance price. The location where you buy the insurance policy and the place where you reside has a great impact on the premium charged. In case your area of residence does not have a lot of traffic, then the premium charged will be less. The car premium tends to be on the higher side for metropolitan cities where the roads have high traffic throughout the day.
If your car has an anti-theft or smart car lock system installed then you might get a discount on the overall premium. These systems alert the car owner in case there is a theft attempt. These safety features have a practical role to play besides helping you lower the car insurance premium.
Women usually pay less premium than men as they are considered to be safer drivers compared to men. A married person who buys an insurance policy has a lower premium than someone who is a bachelor. The age of the driver is also another important factor that determines the premium amount. Individuals under the age of 25 pay the highest premium amount whereas individuals between the age of 50 and 65 pay the least premium amount. It also depends on the driving record of the car’s owner. This means that you get better rates if you have a decent driving record.
The premium for your car insurance can be less or high depending on the amount of coverage that your four-wheeler needs. Choosing a comprehensive car insurance will rake up the premium price, it is very much needed. A third party coverage is compulsory but the choice to add a collision coverage entirely depends on you. The car insurance price increases with add-ons that you buy like vehicle-scrappage policy, zero-depreciation cover, breakdown towing, etc.
A customised car insurance policy that fulfils all your main requirements can increase your insurance premium. Many car insurance providers provide customised insurance plans that only cover benefits and features that are important for the particular individual. This means that one plan that suits one individual might not necessarily be right for another individual.
Insured declared value (IDV) is the amount that shows the current market value of your four-wheeler. This is generally determined by your car insurance company and this value is the current price estimation of your car, after deducting its depreciation value. The insured declared value of your car keeps going down as time passes by due to depreciation. Higher your car’s insured declared value, higher the premium of car insurance.
If you did not make any claims in a particular year, you will be rewarded with a premium discount the next year by the car insurance providers. This benefit is known as No Claim Bonus (NCB). Therefore, make sure to look at the NCB part beforehand and then decide if it makes sense to raise a claim.
Digital-first insurance providers provide comprehensive car insurance plans with amazing features and benefits at a very low price. Since their operational costs are less, they offer insurance policies at a lower rate compared to the traditional insurance providers. Make sure to check the insurance quotes on their official website before you purchase a policy or opt for an insurance renewal.
In case you buy car insurance from an agent, the agent will charge a commission for their service. In case you buy the car insurance policy from a car dealer, then it is likely that the car dealer will provide a fixed car insurance policy providing a cover that you may not require. You might end up paying more for a policy that is not suited for you. Therefore, it is recommended to buy the car insurance directly from the insurer itself.
Here are a few tips that can help you get an affordable car insurance plan:
By keeping the points mentioned above in mind, you can get an affordable car insurance with the same coverage and benefits. Make sure to compare the various policies available in the market and choose one that best suits your needs.
Disclaimer: This article is published in association with Bajaj Markets and not created by TNM Editorial.