Does Car Insurance Premium Go Down as Cars Get Older?

Yes, the car insurance premium changes as the car gets older. The premium for a car insurance policy also varies depending on other factors like coverage, vehicle model, and many other factors. The insurance company is responsible for assessing these factors and accordingly fixes the premium amount for the car insurance policyholder. 

Manufacturing year determines the age of your car. Age is used to understand the depreciation suffered by the vehicle. The premium will reduce in a fixed percentage as per the age of the car. Let’s understand more about depreciation of car in the section below:

For example, when the car’s seat covers are new, they look clean, the colours are bright and fresh, they have no cuts, and the material is even on all sides. But with time and usage, they wear out. The colours fade from temperature changes; they become dirty from stains, and the material wears out from places where you touch it frequently. On a larger level, the above example can be used to describe the depreciation on a car.

Car insurance companies use the following table to determine a car’s Insured Declared Value (IDV).

IDV is the value of the car that a car owner declares while buying a Comprehensive Car Insurance policy. Insurers provide a range of maximum and minimum IDV. The car owner must select from this range or get in touch with the insurer to mutually decide the car’s insured value for the corresponding policy period.

You must have noticed that the manufacturing year (car’s age) is a major component affecting your car insurance premiums. Higher the age of a car, the lower is its value, and thus car insurance premium also reduces. This is why owners of the same car models with different manufacturing years pay a different sum while buying car insurance.

The policy premium is the cost you pay to buy a car insurance policy. In exchange, the insurance company insures you (the car owner) against different financial liabilities related to car damage or injuries as per the policy coverage. They weigh multiple options to determine the cost of car insurance. Here is a list of components that play a vital part in determining the premium.

The maximum NCB discount is 50% on the Own Damage Insurance (damage to your car) premium. You can get this by not raising a car insurance claim in five consecutive policy years.

A car owner can save money on the insurance policy in the following ways.

Apart from following the tips shared above, you can install a certified anti-theft device to reduce the chance of theft claims and get a discount on the premium. Also, consider getting a membership of any Indian Automobile Association and checking for a car insurance discount.

The cost of your car will reduce with age due to usage. This will also have an effect on the car insurance policy. The premium will go down upon each online car insurance renewal, this is in addition to the applicable No Claim Bonus or other factors that affect the cost of the policy.