Factors Affecting Motor Insurance Premium in India

We all know that motor insurance is important for every vehicle owner. Not only does it offer financial protection, but also takes care of legal liabilities in case of an accident. While a third-party liability insurance plan is mandated by law, a comprehensive policy is more lucrative. Be it theft, accidents, or damages caused by natural/man-made calamities, a comprehensive vehicle insurance policy has got your back, whereas the former covers third-party damages and losses only. Though motor insurance offers incredible benefits, it is important to check the premium amount before you choose a policy. Moreover, you should know the factors that determine your vehicle insurance premium. So, let's take a deep dive.

Find out how vehicle insurance premiums are affected in India

• Insured declared value

Insured Declared Value, also known as IDV, reflects the current market value of your motor vehicle. This amount is usually fixed by your insurance company based on thorough research on your vehicle's current price estimation. The Insured Declared Value goes down every year due to depreciation. However, if you are worried about your vehicle’s value depreciating every year, here's a catch: the lower the IDV of your car or bike, the lower the insurance premium. *

• Vehicle owner

When it comes to motor insurance, insurers factor in not only the vehicle, but also its owner. Basically, if you have a poor driving record, you will be charged a higher premium. However, if you have a good driving record, you will be charged lower premiums. Driving like a responsible citizen has its perks. Hence, you must follow all traffic rules and regulations. * Note: Following traffic rules and regulations is crucial irrespective of your vehicle insurance premium. It will keep you, your co-drivers, and pedestrians safe.

• Your vehicle’s make and model

The make and model of your motor vehicle are one of the most important deciding factors for insurance companies. Premiums for sports cars/bikes and other risky vehicles are higher as compared to the amount charged for standard ones. Thus, vehicles with high cubic capacities (CC) are bound to have higher premiums. Since the CNG kit comes at an additional cost, cars that run on CNG have relatively higher premiums. *

• Safety features

Installing safety features such as anti-theft devices shows how much you care about your vehicle. And motor vehicle insurers acknowledge it by charging a lower premium. Moreover, when you install the aforementioned safety gadgets, the chances of your vehicle getting stolen decrease. These devices will alert the owner whenever someone tries to steal your vehicle. Along with lowering your insurance premium, these devices have an essential role to play – ensuring that your vehicle is safe. *

• Insurance coverage

The insurance premium is determined based on the coverage limit. A comprehensive plan will always cost you more than a third-party insurance policy. In fact, your insurance premium will be higher if you choose add-on covers like a zero-depreciation cover, NCB protection cover, engine protection cover, and more. Even though these add-on covers come with a price tag, they can prove to be instrumental during a crisis. Now, let's say, you drive to work in your priceless possession during the monsoon season. However, as soon as you leave, it starts pouring outside. You somehow reach the office. By the time you leave work, you realise that potholes and certain areas of the road are waterlogged, and your engine gives up due to water ingression. Motor insurance plans do not cover your vehicle’s engine unless you have an engine protection cover. Hence, if you live in areas with heavy rainfall, this add-on cover can be your saviour. Here's another example: let us assume that your car is damaged beyond repair due to a bad accident. During such instances, your insurer will offer the IDV of your car, without deducting the depreciation amount. *

• Frequency of claims

If you raise insurance claims frequently, you might have to pay a higher premium. On the contrary, if you have made no claims throughout the police tenure, most insurance providers offer a No-Claim Bonus at the time of vehicle insurance renewal. You can also protect your No-Claim Bonus with an NCB protection cover. It will ensure that you enjoy a reduced premium even if you make a claim or two, depending on your insurer’s terms and conditions. *

• Modifications to your vehicle

If you have made any aesthetic or performance-based changes to your vehicle, you will have to pay a higher premium. For example, engine modifications may increase the risk of accidents, which means greater liability for the insurer. Hence, insurance providers charge a higher premium for vehicles with modifications. * Since you now know all the factors that add up to make your insurance premium, it gets easier to make an informed decision. And now that you know your habits also play a huge role in it, ensure that you drive safely. Do not forget to check the insurance premium charged by different companies using a vehicle insurance calculator to choose the one that fits your budget and needs. In fact, with insurance companies offering their services over the internet, you can also make vehicle insurance online payment for a seamless experience. * *Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.