Car insurance is a must in India but you don’t have to break the bank to get it. Knowing what affects your premium can help you save money while still getting good coverage.
You have to give accurate information to the insurance company. But that doesn’t mean you can’t be smart about it. Certain things can make your insurance cost more. Understanding these factors can help you find ways to save money.
By being upfront and understanding how insurance works, you can get a good deal without sacrificing coverage.
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Here are some key factors that affect car insurance premiums
Car and engine type
The type and model of your car affect your insurance premium. Fancy cars like SUVs or luxury brands like BMW and Mercedes usually cost more to insure than simpler models like hatchbacks.
Also, the type of engine matters. Diesel cars typically have higher premiums than petrol ones because they’re more expensive.
The size of your engine, measured in cubic capacity (CC), also plays a role. Bigger engines mean higher premiums.
Even electric cars, while encouraged by the government, can have higher premiums because of their advanced technology.
Also Read: 10 things to know about Insurance for Cars
Understanding Insured Declared Value (IDV)
Your car’s Insured Declared Value (IDV) is its current market worth, and it’s a big deal in insurance because it affects your premium.
When you buy a new car, the IDV is usually 95% of its showroom price, accounting for a 5% depreciation.
As your car ages, its IDV decreases because of depreciation and other factors.
Simply put, if your car costs more, it’ll cost more to insure because the IDV is higher.
Location of use
Living and driving in busy cities like Mumbai, Delhi, or Bengaluru means higher car insurance premiums due to more accidents and thefts. Insuring a car in a metro costs more than in a smaller city because of the higher risk of damage from factors like traffic congestion.
Type of Insurance Cover
In India, you need basic Third-party insurance by law. It covers damages you cause to others. Comprehensive insurance covers both your damages and others.
You can add extra coverage. Third-party insurance costs less but covers less. Comprehensive insurance costs more but covers more.
Also Read: What is zero depreciation insurance for cars and its benefits?
Add-ons
Add-on covers boost protection but also raise premiums. Options like zero depreciation, engine protection, or roadside assistance increase coverage but cost more.
Choose add-ons based on what your car needs, like covering expensive modifications. Remember, more protection means a higher premium.
Knowing these factors can guide your car insurance decisions. You can’t change everything, like your location but having a good driving record and comparing prices can help you find good coverage at a fair cost.
Be careful of going for the cheapest option; make sure it actually gives you the protection you need.
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