Car insurance premium is the amount you pay for seeking insurance coverage. As a car owner, it is mandatory to have an insurance policy. But while you shop for one, it is essential you are aware of the different components that impact such premium. For instance, you might have noticed the premium for your friend with the same car is different than yours. The reason for such differential pricing is based on the various factors that impact the premium. This article elaborates on these different factors that impact the car insurance prices.
- Type of coverage
The primary factor that impacts the premium is the type of insurance coverage. When you buy a car insurance online, there are two types of plans among which you pick—a third-party liability plan or a comprehensive plan. For all third-party plans, the premiums are decided by the regulator, Insurance Regulatory and Development Authority of India (IRDAI) and hence are set at price point so that all buyers can purchase. Moreover, such third-party plan is a legal requirement and hence, needs regulation by controlling body like IRDAI. You can visit the official website of IRDAI for further details.
Contrary to third party car insurance policies, ac comprehensive plan offers a wider coverage protecting the damages to your car alongside third-party liabilities. Thus, the premiums are higher in comparison to a liability-only plan. Moreover, the premiums for own-damage component, which is a part of the comprehensive plan, is decided by each insurance company and hence differ. *
- Make and model of the car
Once the policy coverage is factored in, the model and make is something that goes into consideration. As every car is built differently, the risk which the insurance company has to undertake also differs. For that very reason, the premium also differs. For instance, an SUV with 2000 CC engine will have a dearer premium when compared to a hatchback with just 1000 CC engine. Further, the manufacture and the variant of the vehicle is determining factor for pricing the premium rates. *
- Add-on covers
Comprehensive plans can be customised using the add-on facility. These add-ons are extra policy features over and above the base policy coverage and hence contribute to an increase in the premium amount. When selecting add-ons, you have the option to choose from zero-depreciation cover, engine protection cover, 24X7 roadside assistance cover and many more. Compared to the benefits these add-ons offer, the impact on car insurance prices is nominal and hence, should be included in your policy coverage. *
- Location of registration
Car insurance policies are divided in two zones for pricing the premiums. Zone A comprises of eight metro cities of Mumbai, Delhi, Chennai, Hyderabad, Bangalore, Kolkata, Ahmedabad and Pune whereas Zone B covers the rest of India. Based on where your vehicle is registered, the premiums are levied accordingly as Zone A has more risk factors. *
- Modifications to your car
As appealing it may seem, modifications that enhance the risk coverage for the insurer impact the premium amount. For instance, installing performance upgrades which increase the power figures of your car impact the premium. *
* Standard T&C Apply
With these different factors explained, the next time you are buying a car insurance policy, you will exactly know how each factor plays a critical role in determining the premium of your policy. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.