7 details required to calculate car insurance premium

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The premium you pay for different car insurance plans is different. This is because an insurance cover is specific to one vehicle and the owner’s needs. You, therefore, need a car insurance calculator to know how much your premium will be. These calculators are widely found online and are very easy to use. But which factors does a calculator use to arrive at the premium amount? Let’s find out.

Details required to calculate a car insurance premium

  • Insured Declared Value (IDV): As your car ages, it depreciates in value. The IDV or the insured declared value is the approximate current market price of the car after deducting the depreciated value. Car insurance will be offered on the IDV of the vehicle. So the premium would greatly depend on this factor. Make sure you enter the IDV correctly into the calculator when calculating the car insurance premium.
  • No claim bonus (NCB): If you have an accumulated NCB, the amount will be deducted from your premium. So this is another important factor that you need to feed into the calculator to arrive at the perfect car insurance quote for your vehicle.
  • Discounts: Often, insurance provider offer discounts on the car insurance premium. For instance, if you are a loyal customer and buy all your plans from the same insurer, you may get a discount on your car insurance premium. Also, when you install safety gadgets or become a member of an Automobile Associations of India, you are offered discounts. These discounts impact the overall premium calculation.
  • Model and make of the car: A car insurance cover is directly proportional to the price and value of the car. Since a small hatchback is less expensive than a large sedan, the premium of the former is lesser than that of the latter. So the make and the model of a car plays a deciding role in the car insurance quote that you are given.
  • Owner’s profile: Young people tend to engage in rash driving. So some insurer associates a higher risk with them and asks people under 25 years of age to pay a higher car insurance premium. Some insurance providers also consider women to be better and more cautious drivers, so offer lower premiums to them. The profile of the car owner may, therefore, become a factor when the premium calculations are done.  
  • Fuel type: A diesel or a petrol car is likely to have a lower insurance premium than a CNG car. This is because the CNG car needs higher maintenance and the owner may need to make a higher number of claims. Keeping this in mind, the insurer charges a higher car insurance premium for a CNG vehicle.
  • Riders: Riders are add-on covers that are available at an added cost. Riders are helpful and allow you to customize your plan in a smoother manner. However, the addition of riders makes your premium go up. So when you calculate the premium, you have to mention the number of riders you want. The more the number of riders, the more costly your plan will be for you.

The final word

As you may have already guessed, your premium calculations depend on how you wish to customize and use your insurance coverage. So use a car insurance calculator before you buy the plan to get an idea of the estimated premium costs. This will help you to choose the right cover. Do not blindly agree to the premium your insurer offers. Double check it yourself to ensure the calculations were done properly and you are charged accurately.


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