Factors That Affect Vehicle Insurance in India

Buying a car, whether new or second hand, has its own charm. In addition to a new car, you also need to purchase car insurance that covers you at times of need. A third party motor insurance is a mandate by the government, so you have to purchase it before taking your car on the road. Alternatively, you could look at a comprehensive motor insurance policy, which suits your requirement. Many sites give you information about online motor insurance calculators, which help you determine your insurance amount against premiums.

In addition, multiple other factors affect your motor insurance. Below are a few of them.

  • Your car’s age

Your motor insurance provider will estimate your vehicle’s worth while giving you insurance. This is known as Insurance Declared Value (IDV). If your vehicle is new, your IDV will be higher. An older vehicle has more wear and tear and, therefore, it has a low IDV. Your insurance coverage amount depends on this IDV. Essentially, your vehicle’s age at the time of policy issuance determines the insurance amount.

  • Your car’s model and make

The model, make, and engine capacity of your car does play a role in determining the insurance cover for it. This affects the IDV of your car, just as its age does.

  • Your residential address

It may seem surprising, but the area you live in also affects your insurance amount. If you live in an extremely populated area with lots of vehicles and traffic, your motor insurance premium may be more compared to the premium paid by someone who stays in a very peaceful neighborhood with minimal traffic. In India, Zone A (which includes the major metros and some mini metros) has higher insurance rates than Zone B (which includes the rest of India).

  • Additional covers

Another factor determining your insurance premium is the number of optional riders you choose to add to your policy. Your premium will be higher if you add optional additional riders like Roadside Assistance, Engine Protection, Lost Key Replacement, and the like.

  • Claim history

If you have claimed insurance the previous year, then you will not get the No Claim Bonus (NCB). You will also have to pay a higher premium when you renew your car insurance policy.

  • Age and occupation

The younger you are, the higher is your motor insurance premium. It works on the principle that young drivers are more prone to rash driving than seasoned drivers. Your premium reduces, as you grow older. For those belonging to a select set of professions, like doctors, chartered accountants, and the like motor insurance providers offer a discount on the premium amount.

The above are some of the factors that determine your motor insurance amount and premium that you need to pay. You may not be able to control all these factors, but you can definitely do your homework and get the best possible motor insurance for your vehicle. Using motor insurance calculator available online and comparing different insurance policies can help you make an informed decision.

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