Analysis of Car Insurance Premium
Due to the number of variables that have a high impact on the car insurance premium, it becomes
one of the most complicated insurance policies to buy. Over the years, car insurance companies
have started to introduce easy-to-navigate platforms for online car insurance for users so that they
can compare the motor insurances and then make the choice. So, let’s have a look at what really
makes care insurance premium.
The three main components of car insurance premium are as follows:
1. Third Party Claim
2. Own Damage Claim
3. Accidental Cover
Now let us delve deeper into the factors of car insurance premium.
1. Location: India has been divided into 8 metros and the rest of the cities according to the
Motor Insurance Act. The premium asked for the 8 metros is comparatively higher when
compared to the rest of the country. In cities like New Delhi, Mumbai, Bengaluru, Kolkata,
Hyderabad, Chennai, Pune and Ahmedabad, the risk factor is more. So normally, the
premium is calculated on the basis of these locations. Though, there are few car insurance
companies that charge more premium is your vehicle is registered in say Punjab or Delhi
where the chances of accident or theft are more.
2. Engine CC: The third party component of the car insurance is more for vehicles which
have higher engine displacement (CC). The classification thus is as follows:
i) Rs 670 for >1000cc
ii) Rs 800 for 1000 to 1500 cc
iii) Rs 2500 for more than 1500 cc
3. Car’s Age: Depreciation in accordance to the age of the vehicle also plays an important part
in framing the car insurance premium. The depreciation value reduces with the increase in
the age of the car and along with it, the own damage component of the car insurance also
4. No Claim Bonus: Policy holders who have no claims or lesser claims are rewarded by the
car insurance companies. In fact, up to 50% of rebate is offered by the car insurance
companies if there has been no claim in the past. The rebate is endowed on the own damage
component of the car insurance.
5. Car’s manufacturer: The car insurance companies keep a flawless track over the kind of
claims which might be higher for one car’s manufacturer or model in comparison to the
other car manufacturer/model. So premium also depends on this fluctuating ratio. For
example, the premium which you have to pay, say for Mahindra Scorpio would be higher
than that charged for Honda City or Maruti.
6. Profession: Sometimes, 5% discount is offered for car owners who are in Central
Government jobs. At the same time, the age of the driver/owner also plays an important
part in deciding the premium for the car insurance policy.
Keeping all these facts in mind, always compare the care premiums offered by the different car
insurance companies with strict scrutiny. The comparative analysis of car insurance companies is
indeed a must in order to avoid later hassles.