Depreciation of the car value is a known factor which influences. However, your car insurance premium can increase due to several other factors as well. The Insurance Regulatory and Development Authority of India (IRDAI) usually increases Third-Party insurance rates on an annual basis. Since Comprehensive car insurance includes Third-Party cover, premium rates are bound to increase.
In this article, learn about the factors which influence the car insurance premium, and ways to lower the premium.
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The IRDAI is responsible for the regulation of the insurance policies in the country. Especially Third-Party vehicle insurance. Third-Party car insurance is mandatory and covers liability due to third party claims arising out of accidents.
Every year, the IRDAI reviews the premium rates by considering the number of claims raised and loss ratios for insurance companies before increasing the rates. Below are the Third-Party insurance premium rates for private two- and four-wheeler for FY 2019-20:
Private Cars with Engine Capacity (CC):
| Type of Vehicle | Premium Rate |
| Less Than 1000cc | Rs.2,072 |
| 1000cc To 1500cc | Rs.3,221 |
| More Than 1500cc | Rs.7,890 |
Two-Wheeler With Engine Capacity (CC):
| Type of Vehicle | Premium Rate |
| Less Than 75cc | Rs.482 |
| 75cc To 150cc | Rs.752 |
| 150cc to 350cc | Rs.1,193 |
| More Than 350cc | Rs.2,323 |
In recent times, the digital era has made insurance transactions efficient and fast. While offering car insurance policies to the customer, especially the Comprehensive coverage, the insurer could consider the below factors in the future:
- Driving Habits: Insurance companies are using Artificial Intelligence and data-driven strategies to understand the driving habits to decide the premium rate. While this form of assessment is yet to be fully established in India, this could become one of the main factors which will influence either an increase or decrease of your car insurance premium.
- Raising a Claim: Based on the number of claims registered or the claims history of the policyholder will determine the premium rate. To differentiate between fraudulent and genuine claims, insurers will assess your claims history.
Insurance companies review different factors before considering revising the premium rates. Below are the factors that insurers most likely to consider before revising the rates:
- History of claims.
- Location of the insured.
- Insured Declared Value (IDV).
- Revision in rates or the terms and conditions of the insurance policy.
Also, read: Car Insurance Premium Calculator
Here are some of the tips to reduce your car insurance premium rates:
- Earn No Claim Bonus (NCB): The most effective method is to not raise any claim during the policy period. The insurance company will offer a discount in the form of NCB which is a discount on the renewal premium.
- Raise Smart Claims: Raise a claim only when you cannot afford to pay for the expenses arising out of damages. By raising small claims you could lose out on the NCB.
- Install Anti-Theft Devices: Installing anti-theft devices to your car could eliminate thefts. Insurance companies offer discounts if you have installed security devices in your car.
- Renewals On-Time: By not letting your car insurance expire, you enjoy the benefit of NCB. Renewing car insurance on or before the expiry will keep your car insured which is mandated by the Motor Vehicles Act.
- Right Add-Ons: Choose only those Add-ons which are absolutely required.
- Modifications: High-end modifications will increase the insurance premium as you may want to cover these modifications against any risks along with your vehicle. By avoiding modifications to your car, you can reduce the insurance cost.
- Others: Providing accurate information such as geographical location, age of the policyholder, marital status or profession will lead to better pricing of the policy.
The online car insurance premium calculator is an easy method to understand what you will pay for the coverage. By simply providing car details and previous insurance policy details, the insurer will be able to provide different plans to choose from.
Below are some of the frequently asked questions about car insurance premium:
While purchasing a car insurance policy, changing the Insured Declared Value (IDV) and Deductibles will affect the premium rate. By not raising any claim during the policy period will earn a discount or a reward in the form of No Claim Bonus (NCB) which is used as a discount for the renewal premium. Also, installing anti-theft devices, choosing appropriate Add-ons, can reduce the premium rate.
Yes, the cost of the vehicle differs in different locations, hence, it affects the car insurance premium rate. This is due to the IDV, which is the current market value of the vehicle, which is different in different parts of the country.
No, you need to pay the premium in full while buying or renewing your car insurance policy.
Yes, it’s one of the most important factors while considering the car insurance premium. Since the cost of the vehicle depends on the model, the insurance premium rate will differ between models. If the Insured Declared Value (IDV) is higher, then the premium will be higher compared to a car with a lower IDV.
The factors which affect the insurance premium are the same for both new and used cars. Hence, you can use the same calculator to find out the premium and the cost of insurance for both second-hand and new cars.
Yes, you can avail discounts through different methods. By claiming your NCB for the policy period, you can reduce the renewal premium which acts as a discount. Installing anti-theft devices, becoming a member of the Automobile Association of India (AAI) might earn you a discount.
Through the calculator, you can determine the approximate premium rate even before you buy the policy. You can even alter the IDV, including Add-ons, deductibles, etc. to view the premium amount for your car insurance.
As per the Motor Vehicles Act, Third-Party car insurance is mandatory for cars and bikes in India. The Insurance Regulatory and Development Authority of India (IRDAI) currently fixes the Third-Party insurance premium amount based on the number of claims and loss ratios of the insurance companies.
The amount that you pay your insurance company on a regular basis in exchange for insurance coverage is known as car insurance premium.
Yes, you get it in the form No Claim Bonus (NCB); however, don’t stop from raising a claim in case the cost to repair the vehicle is high.
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