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Does your car’s colour determine the car insurance premium?

Team AckoJan 17, 2024

The car insurance premium calculation depends upon several factors such as the type of policy, vehicle’s make and model, the engine’s cubic capacity, etc. But does a car’s colour determine the car insurance premium? For example, if you want to own a red car, do you have to pay a higher insurance premium as compared to a white car? The answer isn’t that straightforward. Read ahead to know the details.




Does a car’s colour have an impact on its insurance cost?

The car’s colour might have an impact on its insurance cost depending upon several factors. Here’s an explanation.

In case of a Third-party Cover

As far as the basic Third-party Car Insurance Policy is concerned, the premium for it is based on the cubic capacity of the car’s engine. The rates are stated by the Insurance Regulatory and Development Authority of India (IRDAI). Thus, there’s no scope of the car’s colour having an impact on the insurance premium directly or indirectly.

In case of a Comprehensive Cover

For a Comprehensive Car Insurance Policy, the insurer (for example, ACKO) usually doesn't ask you to share your car’s colour during the policy buying/renewing process. Therefore, if you leave out other factors, the car’s colour does not directly dictate the final insurance price. However, it can have an indirect impact. The following sections will explain how this works for a Comprehensive Car Insurance Policy.

Relationship between the car’s colour and its insurance premium

Now that we’ve established there’s no direct connection between a car’s colour and the insurance premium, let’s explore the indirect connection in detail with the following example.

Red car or white car?

Suppose you win a lottery of Rs. 10 lakhs. With such a large bounty in your kitty, you feel it’s the right time to realise your dream of owning a car. You visit your nearest car showroom and shortlist the latest sedan. But there’s slight confusion. Should you go for the red one or the white one?

With nothing to separate the two cars apart from the colour, you think long-term. You think of the cost of insuring it with a Comprehensive Car Insurance Policy for at least the next ten years, till the time you decide to part ways and buy a new car. Will opting for the red car lead to a higher insurance premium than the white car? You ask the salesman, and he says, drumrolls, yes!

You ask why so because everything else is the same. Both car units are of the same make and model, have the same features, only the colour is different. The salesman answers by saying that as the red car’s demand is on the higher side, its cost is on the higher side. And the higher the cost of a car, the higher the insurance premium.

If, in the future, the demand for the white car goes up, its price will be higher. Therefore, a car’s demand-supply equation dictates its price, and its price dictates the insurance premium.

Relationship between car modifications and the insurance premium 

If you choose to drastically alter the look of your car by opting for extensive paint jobs and graphics, then be ready to shell out more money to insure the vehicle. The logic behind such an increase is the same as above — an increase in value.

  • By embellishing the car, you are increasing its value.

  • The higher value will lead to a rise in the insurance premium.

  • As a result, you will have to pay more money to insure a modified car as compared to insuring a car without any modifications.

What to do in case of mid-year changes?

Typically, a car insurance policy lasts for a year. You should renew it before the policy’s expiry date to make sure there’s no point in time where the car is uninsured. That is a good time to review your coverage and consider if you need more insurance coverage based on the requirements. But what if you make changes to your car during the policy period?

  • If you modify your car by going for an extensive paint job, ensure to inform the insurer about it at the earliest. This is crucial because such car modifications can increase the premium.

  • The insurer may or may not choose to act on the information, but it’s best for you to convey it.

  • If you don’t convey the information and you find yourself in a situation where you have to raise a claim, there’s a chance that the claim might be denied or settled for a lesser amount.

  • It's best to inform the insurer about the changes even if they are mid-year. The insurer might ask for photos or videos to check the modifications or send an inspection team to verify if there’s a need to hike the premium.

  • If the premium needs to be increased, it will most likely be done via making an endorsement in the ongoing policy. You will receive an updated policy once you make the required payment.

Key takeaways

Here are the key points that can be considered as a takeaway from this article.

  • A car’s colour does not have a direct impact on its insurance premium.

  • The insurance premium can be impacted indirectly by the car’s colour.

  • The indirect impact is based on the demand-supply of a car’s colour causing a price rise or on a price rise based on paint-related modifications.

  • If the car’s colour increases the price, then there can be a corresponding rise in the payable premium.

  • If the car is modified (for example, extensive paint job) during the policy period, it’s best to keep the insurer updated to avoid issues in case of claim settlement.

Frequently Asked Questions (FAQs)

The following section highlights some common queries related to the relation between a car’s colour and its insurance premium.


How does a car’s colour increase its value?

A car’s colour can increase its value based on the demand-supply equation. If a particular colour is high in demand, it can lead to an increase in its price as compared to the same car model of a different colour.

Does the car’s colour impact the premium indirectly even during policy renewal?

Yes, the car’s colour will continue to impact the premium indirectly even during policy renewal as its impact on the price will not change.

Can choosing a car of a less popular colour help in reducing the car insurance premium considering it’s a long-term expense?

As discussed earlier, the car’s colour has an indirect impact on the insurance premium. Thus, if a car featuring a less popular colour is low in cost compared to other models, then its premium can be less.  

Hypothetically, will repainting a car with a less-popular colour help me save money at the time of insurance renewal?

Such an exercise is ultimately not likely to be productive, as painting a car with a less-popular colour after you have purchased it from a showroom is not going to impact its value significantly. Besides, repainting is also an expense!

Also, the resale cost of the car is not considered while calculating the insurance premium; the Insured Declared Value (IDV) is considered. It’s the approximate market price (not the resale cost) of the vehicle at the time of insuring it.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions.

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