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Sedan vs SUV Insurance: Which is Cheaper to Insure?

Team AckoAug 17, 2022

Sports Utility Vehicles (SUVs) have become a credible alternative to sedans since they offer the plush ride and features that the latter boasts off. Even the cost of SUVs has become competitive as compared to that of sedans. Some modern SUVs are compact, smaller, and offer a similar cabin space to a sedan. 

Sedan vs SUV Insurance: Which is Cheaper to Insure?

If you weigh benefits and cost in the sedan vs SUV insurance debate, it is worth learning which vehicle will cost more to buy and insure. In this article, we pit the sedan vs SUV insurance to find out if it is cheaper to insure an SUV or a sedan.

Car insurance for SUVs vs sedans

The Indian car industry has evolved over the years to offer different types of cars at affordable price points. Starting from small cars to luxury sedans and SUVs, they come with different engine capacities, designs, accessories, etc.  

Depending upon the type of vehicle, engine capacity, and features, the cost of owning a vehicle (including car insurance premium) differs. Hence, while choosing between an SUV and a sedan, keep the following points in mind.

Factors that influence the car insurance premium for your SUV (or) Sedan

1. Car type

Different types of four-wheelers serve different purposes. You have the smaller hatchbacks, sedans that offer a bigger cabin space, SUVs that can drive well in off-road conditions, and Utility Vehicles (UVs) that can carry more passengers.

Traditionally, SUVs were equipped with higher capacity engines, complex 4x4 mechanicals, off-road focused features that enabled them to tackle tough terrains. However, they did not offer a plush ride like that of a sedan until it is an expensive and luxury SUV. 

That has changed in recent years. The new crop of SUVs is compact and smaller in size but boasts of a spacious cabin, luxury features, higher ground clearance, and a plush ride at a price point equal to that of sedans.

When it comes to pricing a car insurance policy, one of the primary factors is the cost of the vehicle. With the price gap between SUVs and sedans narrowing, the gap in the insurance premium for sedans and SUVs is also reducing.

Whether you buy an SUV or a sedan, the vehicle’s market value is one of the main factors determining the insurance premium. The car or the body type does not impact the insurance price, but the vehicle’s cost or market value influences the insurance cost. In short, the higher the market value of the vehicle, the higher the insurance premium. 

2. Year of manufacture

Your vehicle’s manufacturing year reveals the age of the vehicle. The age of the vehicle is considered while calculating the insurance premium. This is because of the depreciation factor. 

As the vehicle ages, there is regular wear and tear of motor parts. Since market value is crucial in determining the insurance premium, newer vehicles attract a higher premium.

3. Fuel type

Typically, petrol vehicles are cheaper than diesel vehicles. Therefore, the insurance price is lower for petrol vehicles. Whether you purchase a petrol, diesel, CNG, or LPG vehicle, the cost of the vehicle is a primary factor in determining the cost of your insurance policy.

There is a good chance that the insurance premium for a petrol SUV is cheaper than a diesel sedan. Furthermore, if you install a CNG or an LPG kit to your vehicle (SUV or sedan), the premium is bound to increase.

4. Engine capacity

The vehicle’s engine capacity or cubic capacity (cc) is one of the factors influencing the insurance cost. A larger-sized engine will undoubtedly attract a higher insurance premium since the vehicle’s market value is higher.

Also, the insurance premium of the Third-party Liability (TP) plan is based on the vehicle’s engine capacity and not based on the type of vehicle (SUV or sedan).

5. Insured Declared Value (IDV)

The IDV is the approximately current market price of the insured vehicle. It is mutually agreed upon between ACKO and you when you buy or renew the plan. It is also the amount you will receive if your vehicle is stolen or undergoes total loss.

You have the option to increase the IDV while buying or renewing car insurance policy. However, increasing the IDV will increase the premium. Likewise, decreasing the IDV will lower the premium, but that will reduce your claim amount. So, it isn’t really the case that all SUVs are more expensive to insure than sedans since the insurance premium depends on the vehicle’s approximate market value and is not based on the type of vehicle.

6. Location

Location plays a vital role in pricing the car insurance policy. Areas that are vulnerable to thefts, accidents, or natural calamities tend to attract higher insurance premiums. Urban areas can be more prone to thefts/accidents liabilities; purchasing a vehicle in such locations requires car owners to pay higher insurance costs.

Just like other primary factors, location plays an important role in determining the cost of your car insurance policy and not whether the vehicle is an SUV or a sedan. 

Price comparison: SUV vs sedan insurance

Modern SUVs have become more comfortable, safe, come loaded with features, and are available at an accessible price range. They have emerged as a popular choice compared to sedans in India. If you are weighing costs and benefits in the sedan vs. SUV insurance debate, then it is worth finding out which vehicle costs more to insure.

Traditionally, SUVs were expensive due to the performance parts employed to tackle some of the most challenging terrains. But in recent years, SUVs have been toned down to offer the features and comfort of sedans. Even driving the newer and smaller SUVs feels like you are driving a sedan. 

With the introduction of small and mid-segment SUVs, the prices of these SUVs are on par with sedans. As the prices are similar, the insurance cost is on the same lines. So, whether you are buying a sedan or an SUV, the important aspect is the cost of the vehicle. Full-sized SUVs attract a premium price, thus increasing the cost of insurance. 

Are Sedans Expensive to Insure?

Good looks, less elbowing, more leg space, and of course the big fat, boot space. This is what generally comes to mind when thinking about a sedan. They are elegant and can cost a lot if you have a penchant for luxury. But what about insuring those beauties? Does that cost a bomb as well? Yes, if you are comparing it with a low cubic capacity (CC) hatchback, and no if you are comparing it with a high-end SUV. The cost of your sedan’s insurance policy depends upon the following questions.

  • Which Is Your Sedan?

If your sedan has an engine with less cubic capacity, it will cost less than the one with a higher cubic capacity. Also, the make and model of the sedan will be taken into consideration. If you are one of those who consider their car to be a canvas, the extra aesthetic changes might have a bearing on the insurance premium.

  • What’s Your Zone?

Driving in Mumbai where cars almost punch each other in heavy traffic is way different than driving in a small town with lesser cars, and lesser roads for that matter. Sedans registered in metros command a higher premium than those registered in tier 2 and tier 3 cities.

  • Private or Commercial?

The cost of insuring private cars and commercial cars is different, thus the purpose for which your sedan is used also matters. If you are earning money from your sedan by using it as a commercial vehicle, then be ready to shell out extra money to insure it.

  • Are you a good driver?

Mostly, the answer is going to be yes! But your car insurer is not going to take your word for it. What is going to work in your favor is your claims record. If you haven’t raised any claims during your policy period, your insurer will give you a No Claim Bonus (discount) while renewing your sedan’s car insurance policy. Bad driving habits might lead to higher premiums.

  • Is Your Sedan Safe?

Keeping your car hidden behind a waterfall isn’t going to work unless you’re Batman. Guess who doesn’t want your sedan to be stolen? Your insurer. An easier way to keep your car safe is to park it in the designated areas and install anti-theft devices. Insurers might provide a discount on insurance premium if your sedan is fitted with certified anti-theft devices.

  • Do You Have Add-ons?

If you enhance your sedan’s coverage with Add-ons such as Zero Depreciation Car Insurance, Invoice Protection, Passenger Cover, etc. it is going to cost you a higher premium. You can read more about invoice protection, zero depreciation car insurance meaning to understand their benefits. Add-ons are useful but it is suggested to only go for those that meet your requirements. For example, a Passenger Cover won’t be productive if you travel alone in your car.

Insuring Your Sedan

Whether expensive or not, make sure to insure your sedan, to comply with the law and secure your financial interests in case of an unfortunate event such as an accident. A Comprehensive Car Insurance policy can be purchased online within minutes. Make sure you read and understand the inclusions and exclusions of the policy before purchasing it.

Also, read: SUV Insurance

Frequently asked questions

Here are some commonly asked questions about car insurance for SUVs and sedans.

How do insurance companies set premiums for various cars?

Apart from the cost of the vehicle, other factors influence the insurance premiums for various cars. You can refer to the factors mentioned earlier that help insurance companies set premiums for car insurance policies.

Why do luxury SUVs cost more to insure?

Luxury SUVs command a higher price due to the bigger engine capacity, complex mechanicals, high-end features, and more. Due to the higher price, luxury SUVs attract higher insurance premiums. The main factor in influencing the insurance cost is the market value of the luxury SUV.

Is the insurance cost for compact SUVs the same as mid-sized sedans?

With the price gap narrowing between compact SUVs and mid-sized sedans, the insurance cost for compact SUVs is similar to mid-sized sedans.

How to enhance the car insurance policy for my SUV?

To enhance the base policy coverage (Comprehensive Car Insurance policy), you can buy add-ons that provide specific coverage for a lower incremental premium. You can choose from Zero Depreciation cover, Engine Protection cover, Roadside Assistance cover, etc.

How does car classification affect insurance policy?

While purchasing a car insurance policy, your car details such as the model, variant, fuel, and manufacturing year influence the pricing of the policy.

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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