How is the Car insurance premium determined?
Simply put, the car insurance premium is determined by each insurance company in their own way. The car insurance premium also reflects their past experiences of a certain segment, or customer group, etc. So its better to compare 3 – 4 quotes for getting the best insurance with the best car insurance premium possible. However, you need to ensure that the insurer does not reduce the valuation of your vehicle (known as IDV) to reduce premium, as it is counter-productive. Same is the case with deductibles and coverage amount. Lowering these parameters, to give you a lower car insurance premium amount, may adversely impact you when you go for a claim.
Some of the parameters determining the car insurance costs are:
- Your car value as per the insurance company database. – Almost every company has a guiding sheet to show them the value of your car, in normal condition, depreciated over 5 + years period. This list also has a negative list of cars(vehicles), in which the insurance performance history is so bad, that the company will not like to finance it anymore.
- Last IDV (Insured Declared Value) . This essentially suggests how much value was assigned to your vehicle when it was last insured. With every passing year, the IDV of a car/vehicle gets lowered.
- Your age, profession. : Normally, it is used for their records of agewise or professionwise comparison of insurance payment behavior.
- City where the car is registered (not where it is being used).: This shows road taxes applicable to value your car. it also is used to check the insurance surveyor presence/penetration in that particular city.
- Past claims. : In case there are too many previous claims, the insurance company can also decide not to offer you insurance.
- Model/make and year of manufacture of the car. : This helps in determining the true value of the vehicle. For example, they would know how much does a Honda City be worth after 2 years.
If you need any assistance in selecting the best insurance for your vehicle, please fill in the form above and get the best insurance quote.