Buying a car is making one of the most significant investments of your life. For most of us, the car is the second-most-expensive purchase, next to the home. Being a valuable asset, it is essential that we have a vehicle insurance to protect it.
After buying a new car, many of us buy a comprehensive car insurance online policy and stay financially protected as we renew car insurance and pay the premium every year. But, are you aware of the factors impacting car insurance premium calculator?
There are times when despite owning the same vehicle and having the identical parameters, your Jaipur-based friend and you pay different car insurance premiums. Wondering why? As you read the different parameters below, you will understand the reasons for the differing premium.
Third-party policy and comprehensive policy are the two types of car insurance policies. The third-party insurance policy covers only third-party liability while the comprehensive policy covers for the third-party liability as well as own damages.
Car insurance premiums vary widely between insurance companies due to the rating factors, the statistical information they look at, their own claims experience and the cost of doing business.
A car insurance premium calculator for different insurers depends on the following parameters in case of a comprehensive policy.
- A) Own damage premium
Own damage cover provides the financial protection in case of damage to your car during the following events:
- Vehicle theft
- Natural calamities like earthquake, storm, fire
- Man-made calamities like riot, strike, terror attacks
Factors that determine the car insurance premium are:
- Insured Declared Value (IDV)
- Location of registration
- Engine cubic capacity
- No Claim Bonus
Insured declared value (IDV)
IDV is the maximum amount that the insurance company pays to the policyholder in case of any loss or damage to the insured vehicle.
The insured declared value is based on the ex-showroom price of the vehicle and vehicle age and indicates the current market value of the car. However, different insurers may offer different IDV for the same vehicle.
Location of registration
Based on the location of registration, the premium differs and is calculated as per the zones charted out. Following are the two different zones:
- Zone A: Delhi, Chennai, Hyderabad, Mumbai, Kolkata, Bangalore, Pune, Ahmedabad
- Zone B: Rest of India
Engine cubic capacity
If your car’s cubic capacity is higher, the higher would be your premium as well. The third-party premium is calculated as per the engine cubic capacity (cc).
No Claim Bonus (NCB)
No claim bonus is the discount on the premium. If the policyholder does not claim during his tenure, he/she gets to avail the no claim bonus. Thus, no claim bonus is availed as the discount on the premium based on the number of claim-free years.
- B) Third-party premium
The third-party premium is based on the directions given by the Insurance Regulatory and Development Authority of India (IRDAI) every year and depends on the vehicle’s engine cubic capacity. The third-party premiums as per 1st April 2017 are as follows:
|Engine (cc)||Premium (Rs.)|
|Not exceeding 1000cc||2,055|
|Exceeding 1000cc but not exceeding 1500cc||2,863|
- C) Personal accident cover
A personal accident cover acts as a relief in unfortunate and unforeseen events like accidents. It covers the accident-related risks such as burns, broken bones, disability or deaths. The need of the cover is such that the comprehensive cover offers personal accident cover to the owner-driver. It usually offers a fixed sum insured of Rs 2 lakh to the owner-driver. It is feasible to opt for the personal accident cover for co-passengers as well.
- D) Add-on covers
Add-on covers are the optional covers that you may consider availing while buying a vehicle insurance. Although such covers increase your premium amount, they are highly useful in the event of a claim.
Following are some of the add-on covers:
- Roadside assistance and towing
- Engine protection cover
- Accessories cover
- Zero depreciation cover
- No claim bonus protection
- Medical expenses and accidental benefit
- Return to invoice cover
- E) Discounts
- If you have insured your vehicle with an anti-theft device, you will get 2.5% discount or maximum up to Rs 500 on the premium
- If you are a member of the ‘Recognised Automobile Association’, you can avail a 5% discount or up to the maximum of Rs 200
After considering all the factors, the policyholder gets the final premium as per the insurance company’s car insurance premium calculator.
Thus, the final premium for a vehicle insurance is calculated as:
Final Premium =
Own damage premium + third-party premium + optional add-on cover charges + personal accident cover (owner-driver) + optional passenger cover + optional paid-driver cover – (no claim bonus+ other discounts, if any)
It is recommended to do a research about the important factors that affect your car insurance premium before you finalise an insurance plan for your car.