Know Major Factors that Help in Determining Cost of Car Insurance

The Motor Vehicles Act 1988 makes it mandatory for every car running on Indian roads to have insurance. A car insurance policy helps you with the required finances in case your car is damaged due to an accident. Here are some of the major factors determining car insurance cost.

Type of cover chosen

Generally, there are two types of car insurance covers – comprehensive and third-party. A comprehensive car insurance policy offers 360-degree protection and covers financial damages suffered by you, your car and a third party (if any).

On the other hand, a third-party cover only pays for damages suffered by a third-party. It doesn’t pay for the losses suffered by you. Premiums are higher for a comprehensive policy as against a third party car insurance policy since the former offers all-round protection.

Car’s age, model and engine

The premium amount depends on the car’s age, its model and engine capacity. If you have an expensive sports car, premiums will be higher compared to a slower standard car. This is because the former runs a greater risk of getting damaged than the latter.

The engine capacity of the car also plays an essential role in determining the premium. A car with a high engine capacity commands a greater premium. Also, the premium for 4 wheeler insurance for older cars is low as their insured declared value (IDV) is lower.

Geographic location

Car insurance quotes also vary as per geographic location. If you live in a city where traffic is low, there are fewer chances of your vehicle getting damaged. In such a scenario, premiums are lower. On the other hand, if you live in an area where traffic is more, chances of vandalism and accidents are higher. All of these push up the premium amount.

Note that insurers have classified various locations in India as insurance zones. These zones are divided into metro cities and rest of India. Insuring a car slated to run in a metro city will attract a higher premium.

Security features installed

Your car insurance cost will also depend on the security features installed in your vehicle. If you’ve made efforts to secure your car by installing security devices such as GPS tracking, handle and gear lock among others, you might get a discount on the premiums.

However, note that this discount in premiums is applicable only if the devices are authenticated by the Automotive Research Association of India.

Vehicle purpose and driving record

Vehicles used for commercial purposes attract a higher premium. Car insurance cost also depends on your driving record. A clean record without any cases of negligence works in your favour with the insurer rewarding you for your responsible on-road behaviour in form of a lower premium. On the other hand, if you have a history of negligence and rash driving, the premium shoots up.

You can purchase a car insurance online or offline. There are many online car insurance calculators that help you gauge the premium amount. Compare car insurance price from multiple insurers before making a final choice.

With Bajaj Finserv, you can easily buy the car insurance you need. Also, with pre-approved offers on various loans and a host of financial offerings, availing funds is quick and easy. All you need to do is to share a few basic details to know your pre-approved offer.