It so may happen that despite you and your neighbor owning the same car with same parameters, you both pay different amounts for your respective car insurance premiums. This may have led you to question the calculation of premium for your car insurance. For starters, not one but many factors are considered while calculating car insurance premium by the motor insurance providers. The two most important factors are Voluntary Deductibles and choosing to opt for a low insurance coverage.
Apart from these two factors, the car insurance premium is further affected by other factors as well. Having knowledge of such factors can be very helpful when purchasing car insurance online or offline.
- Geographical Location
As you share a direct relationship with the location, your area of residence reflects your lifestyle. The city of your vehicle registration will affect the premium you will pay have to pay for your motor insurance. Insurance companies have classified various locations across the country as “insurance zones.” This has been done on the basis of vehicles exposure to the risk associated with your location.
Generally, these “insurance zones” are the metro cities along with the rest of India. Metro cities tend to have a high rate of accidents. If you happen to reside in a metro city, then you will have to pay a higher premium for your car insurance compared to a person who is residing in a less populated city.
For example, if you buy motor insurance online or offline, with add-on cover like zero depreciation for your new car in a semi-urban locality, you will need to pay premium on car insurance that would be 3 to 5 percent less as compared purchased the exact plan in a metro.
- Type of Insurance Cover
There are two types of car insurance plans available in India; third party car insurance and comprehensive car insurance. The Motor Vehicles Act, 1988, makes at least the third party mandatory for every vehicle. The third party car insurance provides cover only for the damages caused to a third party involved in an accident. It won’t cover any damage to the vehicle or injuries to the car owner/driver of the insured vehicle.
Comprehensive car insurance provides cover for the damages done to the both the parties that are involved in any road mishap, including your own car. There are many people who go for the third party . This is because the premium is lower as compared to a comprehensive insurance plan.
- The Type of Engine
Basically, the car insurance premium is calculated on the basis on two elements i.e. third party cover and own damage cover. The calculation of premium for third party cover is done on the basis of the cubic capacity (cc) of your car engine. The calculation of own damage cover is based on the Insured Declared Value of your vehicle. In simple words, the insurance premium amount for a 1000 CC engine vehicle would be lesser than that of a vehicle with 1500 CC engine.
- Extra Layers of Security
Insurance plans are brought in order to safeguard car from the possible risks. If your car has security devices such as gear lock, handle lock, engine immobilizer, GPS tracking device, etc., the chances of your car being stolen decreases significantly. Insurance providers do consider various anti-theft devices installed in your car while calculating insurance premium. Anti-theft device can help you lower the car insurance premium. Just keep in mind that you would be eligible for this benefit only if the security equipment installed is approved by Automotive Research Association of India.
- Car Modification
In most cases, car accessories like roof rails, spoilers, etc. are not covered in the motor insurance plans. In case you wish to get insurance cover for the accessories as well, get them installed by your car dealer at the time of purchase. Your car dealer would include prices of the accessories in the cost of the vehicle. This would help you to get a high Insured Declared Value from your car insurance provider. At the same time,also keep in mind that this will hike your car insurance premium.
Tips to Buy Vehicle Insurance
Here are some useful tips to help you find the best car insurance plan in India that suits your requirements as well as your pocket: –
- Assess your Requirements
Understanding your insurance requirements is the first step to buying car insurance. Starts assessing your car insurance needs by determining the type of insurance cover you want, any additional riders that you feel you need, premiums, etc. However, when buying car insurance, you should focus on the coverage more than the premiums that you pay.
- Look for a provider with a Wide Network of Garages
Usually,car insurance providers have a network of garages to provide repairing and servicing of cars in case of a claim. So, when you select an insurance provider, make sure to check the list of network garages. Choose an insurer which has wide network of garages with the cashless facility. This in turn will ensure faster and hassle-free claim settlement.
- Check the Claim Data
Before you finalize on an insurer, check the history of claim process. Check the incurred claim ratio and the claim settlement ratio to get an idea about the reliability of the insurer. Although genuine claims are hardly rejected, it helps to know the efficiency of claim process when buying a car insurance policy.
- Accumulate No Claim Bonus
One of the simplest ways to reduce your car insurance premiums is through accruing NCB. An insurance holder can accumulate up to 50% and use it as a discount on the premium. Furthermore, the NCB is linked to the policyholder and not the car. This means that you can utilize your accumulated NCB when you replace your car or switch to another insurer.
- Compare Quotes Online
When buying car insurance, the easiest way to get the best deal is to compare car insurance quotes online. You will need to enter your insurance requirements in the online quote request form to get the quotes. Compare the quotes on the basis of the benefits and coverage offered by each insurance policy to select the best plan.
- Buy Insurance Online
When you are purchasing car insurance policy, it is best to buy it online. While the most obvious advantage of buying insurance online is that you save time and money, there are a number other benefits as well.
The final step before you buy your car insuranceis to read the terms and conditions, inclusions and exclusions of the car insurance policy. One of the biggest mistakes we make is forgetting to read the fine print; steer clear of the same and stay well-informed about what your car insurance policy has on offer.