What Parameters Decide Your Car Insurance Premium?

When you purchase a car insurance policy, the premium amount is an important factor to consider. Of course, you must look at the prices before buying, but don’t just go for a cheap policy and remain under-insured. If you do not have sufficient coverage, you’ll get trapped under a financial burden later at the time of emergency. To make sure that you purchase a policy with adequate coverage along with affordable prices, consider the following factors that determine your car insurance premium.

  1. Car’s age, make and model and fuel type

The value of all commodities depreciates after a certain point in time. The same applies to cars, and hence the age of the car is a major factor to decide your car insurance premium. The next important factor is the make and model of your car, which includes aspects such as the manufacturing company, whether the car is an SUV, sedan or a hatchback, the ability of the engine and so on. The amount of premium depends on the IDV which would correspond to total of all these factors put together.

Next in line is the fuel type, which majorly includes whether your car runs on petrol, diesel or CNG.

  1. Car Insurance Policy type

Comprehensive car insurance policies provide extensive coverage and cover minor damages, thefts, damages caused during natural calamities, and have many other add on aspects. However, basic third-party insurance which is a compulsion to have in India selectively offers coverage for only third-party liability at a standard cost. The third-party insurance holders end up paying for major repairs and damages from their own pockets.  Keeping your requirements in mind, opt for the policy type that will be of help to you, offered by your preferred general insurance company.

  1. Deductibles

The two types of deductibles in car insurance are voluntary deductibles and compulsory deductibles. As an owner of the insured car, you can opt voluntary deductible that you’re supposed to pay during claim from your pocket.

  1. Insured Declared Value

IDV has a lot of impact on the car premium paid by the buyer as this is the value at which the car would be available in the current market scenario. In case there is huge damage to the car, which would cost beyond the insurance limits, the company grants the owner the total insured sum amount, declaring it under total loss.

  1. History of Driving

If you have been driving rash in the past and have had accidents or been involved in any rule-breaking cases, it has a direct impact on the premium amount that you pay. A safe driver is at a lesser risk of damaging the car hence his insurance premium would be lesser than a high-risk driver.

  1. Location and Registration Area

The areas that are prone to the accident have a higher premium for car insurance policies. And if you reside in an area of political unrest, depending on your insurance provider, the premium amount might increase. Along with this, the area of registration of your car also has a role in the increase or decrease in the amount of car insurance premiums.

One of the best ways to find out the approximate price of your insurance policy is by using a car insurance premium calculator. The aforementioned factors are the parameters to be used while calculating the premium amount.