How do car insurance companies calculate premiums?
The amount of premium that you need to pay for your car depends upon various factors. One of the preliminary factors here is the Make and Model of the Car. By Make we basically mean which Company is the manufacturer for example, Hyundai or Honda etc. By Model we essentially mean the model of the car namely in Hyundai i20, the i20 is the model. Many times the year of manufacturing is also taken into consideration as the model of a particular car.
What is IDV?
Insured Declared Value also referred to as IDV is the maximum amount assured by the insurer in the event that your car is stolen or there is total loss of your vehicle. It is the current market cost of the vehicle which is arrived at by subtracting the depreciation from the selling price listed by the manufacturer of the vehicle. Depreciation is calculated based on the age of your vehicle. The amount you pay as premium depends upon the IDV value. Thus, lesser the IDV value lesser shall be your premium and vice-versa. Having an IDV for your vehicle is important as it helps you to know the current market value of your car.
What is CC?
Comprehensive Coverage also referred to as CC in Car insurance is the most extensive coverage in a car insurance policy that covers various facets such as damage to the vehicle, theft to the vehicle, third party legality as well as personal accident cover. The scope of Comprehensive Coverage is very flexible and you can stretch it to cover various other attributes such as accessories cover, zero depreciation cover, engine protector, medical expenses etc. The Comprehensive Coverage proves to be full of respite to a customer because of its ample scope and ability to cover most daunting aspects in a Car insurance policy. It is also referred to as an end to end policy because of its extensive coverage. CC is also an important criterion for the calculation of your insurance policy premium.
City of registration
City of registration also plays an important role in the calculation of your insurance premium. If your vehicle is registered in an urban area then it will attract a higher premium as it witnesses a heavier density of traffic as compared to a suburban area which might not have a significant traffic density.
Does my city have an impact on the premium paid?
The city where you intend to get your vehicle registered does have an impact on the amount of premium that needs to be paid. This is based on a simple logic. The city which witnesses a higher density of traffic will be liable to a higher premium on your insured vehicle vis a vis a vehicle which is registered in a city with the lesser density of traffic. For instance, there could be a difference in the premium paid for a metropolitan city versus a smaller town, with the metropolitan city attracting a higher premium.