The settlement amount in India for death claims was more than Rs.9 lakh, and for injury, it was more than Rs.2.5 lakh during the financial year 2018-19. Every year, the amount is increasing primarily due to inflation and income. It also means individuals need to spend a substantial amount to pay a premium for a car insurance policy.
Therefore, it is better if individuals understand and identify the factors that determine a plan that is affordable. It ensures a smooth premium payment without straining monthly budget.
Following are the top 7 factors that influence a policy’s premium amount for a four-wheeler insurance policy.
- Car type
The premium of a car insurance policy depends on the purpose for which a particular vehicle is used. For instance, the premium for a personal car and a commercial vehicle differs to a significant extent. Since a commercial vehicle is an income source, individuals need to pay a higher premium.
- Make, model and age
The amount you pay for premium also depends on the Insured Declared Value or market price. Hence, you need to bear an increased premium amount for bigger or luxury cars like SUVs, top-model sedans and the like. Similarly, in terms of fuel type, you also need to pay a substantial premium for diesel cars when compared to petrol cars.
Besides make and model, the age of insured car also affects premium for a 4 wheeler insurance policy. Insurers check year of purchase, registration date before declaring the premium. Hence, you need to pay more for older cars as their market value is decreasing.
- Safety devices
In recent times, almost all cars accompany state-of-the-art safety devices or a system like anti-theft devices, modern braking system, auto-lock features, airbags, etc., to ensure the passenger’s safety on the road.
Insurers generally offer an affordable premium for cars with advanced safety system as they face a lower risk of damage or theft. Moreover, individuals can also avail an additional discount if the insured car is registered with Automobile Research Association of India (ARAI).
- Insurance zones
The location of the RTO and car to be insured also determines the premium of a car insurance policy. The zones are generally determined based on the car’s susceptibility to damage or loss.
For instance, the premium for urban or metro cities is higher due to higher rates of accidents, theft and vandalism than in the rest of the country.
The coverage of a car insurance plan decides the premium you pay. Since a third party car insurance plan is mandatory in India and only covers the third-party car, property or person, the premium is lower.
On the other hand, premium for a comprehensive car insurance policy is higher as it includes both third-party and personal damage coverage. Trustworthy insurance aggregator, Bajaj Finserv offers motor insurance policy which comes with a host of additional benefits.
Besides basic car insurance policy, individuals can also opt for rider or add-on insurance plans. Moreover, depending on this factor, the premium varies. For instance, add-ons like passenger cover, travel assistance cover, etc., attract higher premiums. Thus, it will be wiser to choose the add-ons carefully and only the necessary ones.
Remember, the add-ons need to be selected while purchasing an insurance plan.
- Insurer charges
Usually, the premium of an online car insurance plan is more affordable than a traditional offline plan. Since there is minimal human intervention or minimal operational cost for an online policy, insurers charge a lower premium.
However, it is necessary to check different insurers before purchasing such coverage to ensure optimal suitability.
Besides, several other factors also influence the premium of a car insurance policy. For instance, no claim bonuses provide attractive discounts on the premium upon policy renewal or increase the sum assured with every passing year.