Do Car Specifications Affect the Premium for Car Insurance?

Do Car Specifications Affect the Premium for Car Insurance? 

There are a variety of car insurance policies available in India, each one at a different premium. Ever wondered how Insurance policies prices vary between car types?  The specifications and model of the vehicle primarily affect the premium rate. Read further to understand this in detail.

How do car specifications affect the insurance premium? 

A vehicle’s insurance premium is primarily calculated based on the cubic capacity of the vehicle’s engine, the Insured Declared Value (IDV), and the model of the car. The IDV gives the value of the car while the cubic capacity of the engine determines the risk factor and directly affects the premium rate. Cars with advanced features and specifications cost high premiums since they are expensive to repair, and insurance companies need to cover these costs.

Other Factors that Affect the Premium of Car Insurance 

Though the specifications of the car affect the car insurance premium, there are several other factors that affect car insurance premiums. Below are some of these factors:

Manufacturing and Registration Dates – The manufacturing and registration dates determine the age of the car. Older cars are at higher risk, and the value of the vehicle decreases due to depreciation. Thus, the older the car, the higher the premium rate. 

Type of Insurance Cover – Car insurance is available with different coverage options. The type of coverage and sum assured affect the premium price. Below are the three primary car insurance policy categories: -

• Third-Party Insurance – This policy is mandated by the Motor Vehicle’s Act 1988, and it covers liabilities caused to third-party people or property. It does not cover the policyholder’s personal damages.
• Own Damage Insurance – As the name suggests, this policy covers damages caused only to the insured. This does not cover third-party damages and since third-party insurance is mandatory, one will have to buy a separate third-party policy.
• Comprehensive Insurance – This policy covers third-party damages as well as personal damages under one policy premium, and therefore may cost a little more than the other two options.

Gender and Age – The gender and age of an individual can give insurers an idea about the risk factor involved. For example, it is likely that young female drivers are charged a low premium, young male drivers are mostly charged a higher premium.

Location - Where you live can also affect the premium of your car insurance policy. For cars that are bought in Metro cities, the insurance premium is generally at a higher rate than that in a smaller city.

Safety Devices – Installing safety devices in the car can affect the insurance premium. Insurance companies see those who install these devices as responsible customers and, in many instances, offer discounts on premium rates.

No Claim Bonus – This is a cumulative discount offered for a claim-free year. The discount starts at 20% and can go up to 50%. If one does not make claims for 5 consecutive years, they can avail up to 50% on the insurance premium during policy renewal.

Thus, you can see that car insurance is not just based on the specifications but also on several other factors. While buying car insurance, make sure you are aware of all the factors that affect your car insurance premium. It is important to find a policy that is affordable and covers one’s requirements. Visit Chola MS to know more about car insurance policies!

 

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