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These 7 factors influence your Car Insurance premium

Having Four-Wheeler Insurance is mandatory in India. Besides promoting responsible driving, it offers protection against financial losses. It saves the driver from bearing heavy repair and medical expenses in the case of road collisions. It even provides monetary assistance to unanticipated damages caused by natural calamities. 

In India, Car Insurance companies use algorithms based on their claim data and your personal information. This helps them determine the premium rates. Hence, knowing what aspects of your information affect the premium structure is essential. It assists you in making an informed decision when buying them. Following are the factors that dictate your policy’s premium:

  • Vehicle model

The model signifies its market value. This approach is called the Insured Declared Value or IDV. If you own a lavish sports car, the Insurance provider will likely charge you a higher premium. Similarly, owning a more standard vehicle invites a lower premium for your Car Insurance Policy

  • Purpose of the car

How and why you use your vehicle also plays a crucial role in dictating your premium. Insurance providers offer Insurance for personal and commercial vehicles. However, there is a significant difference in the premium charged on both. For instance, the premium on commercial vehicles is relatively higher than that of the Third-Party Car Policy

  • Personal driving behaviour

If you have a history of road accidents or have perhaps made previous claims, the Insurance company views you as an irresponsible driver. They presume that you will make another claim soon. As a result, you may need to bear higher premium rates. If you hold a poor driving report, the company might even deny your online Car Insurance application altogether. 

  • Age & gender

According to statistics, young males are more likely to be involved in road accidents than young females. This is primarily why young men attract higher premiums than young women. However, the premium rates get stabilised once they turn 25. If you associate with the former category, this is an important aspect to consider during the Car Insurance renewal

  • Type of insurance plan

Today, insurers offer different plans. You need to pay a higher premium if you opt for a more customised plan with various add-ons. However, it is worth the money as you get more comprehensive coverage.

  • Insurance zones

In most cases, insurers observe specific demarcated zones. These zones decide your Motor Insurance premiums. They are created by assessing the vehicle’s vulnerability in that area. For example, the likelihood of your vehicle involving in an accident in that zone is a factor companies consider while framing the premium. 

You would be more prone to accidents if you reside in an urban area with frequent traffic. As a result, you can invite a relatively higher premium due to the possibility of more claims. 

  • Security system installed

Four-Wheeler Insurance premiums also depend on how protected your vehicle is. A prime indicator is the security system. The premium amount automatically increases if your car is installed with one. This is because you could not save your vehicle from theft despite having such a facility.

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