12 factors considered for calculating car insurance premium

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There are many different factors that affect the car insurance premium calculations. From the type of vehicle you have to the place you reside in, everything plays a role in your car insurance cover. Take a look at this article to know about the details that are taken into consideration when your premium is calculated.

Factors considered to calculate car insurance premium

  1. Type of plan: This is one of the most crucial components taken into consideration. If you have a comprehensive plan, your premium will be higher as compared to the premium of a third party plan. When you use a car insurance calculator, this is the first detail you will be asked to enter.
  2. Riders: Next, we come to the riders which are add-on covers. Riders are added at an extra cost to your comprehensive policy. If you have a higher number of riders, your premium rate will be higher too. So choose your riders carefully and only buy the ones you absolutely need.
  3. NCB: The no claim bonus is a discount you get for making no claims in the previous policy period. If you have some NCB in your kitty, you will get a discount on the premium. Make sure you enter the correct NCB when you look to renew or buy car insurance online.
  4. IDV: A car ages with time and its value drops with every passing year. The IDV is the approximate current market price of the vehicle. The car insurance premium is finalized after taking the IDV into account. The IDV, therefore, is one of the most important factors in the car insurance calculations.
  5. Discounts: If you are a member of an automobile association, you will stand to get a discount on the premium of your car insurance plan. Similarly, if you have installed certain safety devices in your car, then too you will get a discount. So make sure you inform your insurance provider about these factors before you buy the plan.
  6. Fuel type: Petrol and a diesel car usually have a lower premium than a CNG car. So the fuel type also plays a role when the premium is decided.
  7. Vehicle type: If you have a commercial vehicle, the insurance company will ask you to pay a higher premium. The premium will be slightly lower when you have the vehicle for your personal use.
  8. Make and model: When you look for car insurance online, you will first be asked which car you own. If you have a large SUV, your premium will be higher as compared to the premium of a hatchback car.
  9. Deductible: You can choose the deductible for your car insurance policy. If you are confident of your driving skills, opt for a higher deductible. This will bring your premium down. If you aren’t so confident, opt for a lower deductible and get a higher cover at a higher cost.  However, remember that opting for a higher deductible will result in a lower claim amount.
  10. Profile of policyholder: The profile of the vehicle owner may be an important factor in car insurance. Since many people under the age of 25 indulge in rash driving, the premium charged to them is more. So your personal details need to be entered correctly into the car insurance calculator to get the perfect premium figures.
  11. Location: Car insurance costs more in urban locations. So if you reside in a tier 1 city in India, you have to pay a higher premium.
  12. Policy term: Finally, we have the policy period of the plan. If you buy a regular one-year car insurance online policy, your premium will be lower. If you opt for a three-year or a five-year plan, your premium will differ subsequently.

The bottom line

These are some of the most important factors that affect car insurance premiums. Keep them in mind and enter them accurately into the online calculators before you buy a plan. You will then know how much premium you have to pay and can plan your car insurance expenses accordingly.


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