What Factors Affect Your Car Insurance Premium? | VehicleCare
Car insurance is necessary after The Motor Vehicle Act of 1988 under which it is compulsory to have car insurance if you want to drive a car legally in India.
Car Insurance Premium provides us a feeling of security and peace by including Different types of cars Demange coverages which are very costly- Liability, Collision, Accidental injuries, uninsured motorist protection, Comprehensive Coverages. These are all included in your car insurance but always read your insurance policy provided by the Car Insurance Companies although they make it clear at the time you buy car insurance premium.
But the cost of the Car Insurance Premium is calculated by the insurance company based on different factors which we are going to discuss in this article.
Table of Contents
Different Factors That Car Insurance Companies Consider
IDV (Insured Declared Value)
Car Insurance Premium is Directly proportional to the IDV.
- IDV is the resale value of the car that we get if we sell our car to someone else.
- IDV is calculated after decreasing the depreciation value of the car.
- The IDV (insured declared value) of the car decreases with time.
- But if the IDV is high so will be your car insurance premium.
Well, Car Insurance Companies sure keep these values higher than what we would get in the market.
Make, Model, Variant
It’s a key factor that the car insurance company considers for the cost of Car Insurance Premiums.
- Make- Car make is the brand name of the car whether Premium and Luxury car makers are always at the top on the cost of car insurance Premium.
- Model- The car model of your car is the name of the car. Cubic capacity of your car and Top speed and fuel type is big factor on which car insurance premium depends.
- Variant- Car variant is the label used in describing the car. Top Variant is loaded with different features making it costly so, in turn, the Car Insurance Premium is higher for top variants.
Car Insurance Company charges different according to different factors.
Also Read: Future of Car Service Centres in India
Age of Car
Other factors like the year of manufacture, the age of the car has a significant impact on the insurance premium we buy. As we know car insurance is directly proportional to the IDV (insured declared value) so as the IDV of a new car is more so is the Car Insurance Premium.
No Claim Bonus
- NCB (No Claim Bonus) is a kind of compensation that is given by the Car Insurance Company for no claims made during the last term of insurance, so a discount is given for the next insurance which sometimes can cost us 50% less in the next insurance.
- No claim provides a sense of security to the insurance company about the driver driving behavior for which they provide them with a No Claim Bonus.
Bigger cities with more traffic are charged more for Car Insurance Premiums as compared to small cities. As we know the Cost of living is more in bigger cities, also the car cost and repair costs are a bit higher which in turn increases the cost of car insurance.
Owner of the Car
- Driving record of the car owner matters a lot as it is the only way the behavior of the car driver can be known if he is a safe driver or an aggressive one.
So, the car insurance cost less to the one who has a clean record with the traffic police and has no accidental record.
Car Safety Features
- Safety Features in a car decreases the value of a Car Insurance Premiums as the chances of saving human life and even injuries are lower. If can make our car safer by paying some extra money. The cost can be ignored and for this reason, only people buy a top variant of the car which are fully loaded with all the safety features of the cars.
- Anti-Theft features, car alarms, and GPS systems that are approved by the Automotive Research Association of India (ARAI) help in reducing the cost of car insurance premiums.
- If you are worried about the cost of Car Insurance Premium well if you keep these points in mind you can reduce the cost of vehicle insurance. Car Insurance Companies consider every little factor that can help in making a profit as for a car insurance claim they have to bear a huge amount.
- We should try to avoid car insurance claims if possible as the IDV (Insured Declared Value) is reduced every time we claim insurance for our car. As accidental cars have a lower resale value in the market.
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