6 Factors that Impact Car Insurance Premiums

The price of car insurance is increasing every year, which is becoming a financial burden for most of the people. But because of the increasing number of road accidents, lunatic drivers and unstructured roads, you also can’t ignore the importance of car insurance and having a car insurance is also mandatory in India. But when there is a problem, then there is a solution also and the same goes for dealing with the rising price of car insurance policies.

The premium of the car insurance is decided basis multiple factors and having a detailed knowledge about these factors will allow you to make the purchase of the car insurance policy, the most cost effective deal without even compromising on its benefits.

So let’s look at the 6 most important factors which impact the car insurance premium through this article.

1. Your Location

Where you live and the location where your car insurance is registered plays an important role in deciding your car insurance premium. That’s why insurance companies have created insurance zones on the basis of vulnerability of loss or damage. If you are living in an urban area, then you will have to pay higher premium amount in comparison to what a person living in a rural area has to pay.

2. Gender, Age, and Marital Status

Your personal information like your gender, age and marital status also plays an important role in deciding your car insurance premium. Women are considered safer drivers than men and that’s why women are charged fewer premiums than men.

If you are married, then you will have to pay less premium in comparison to what a single person has to pay and this is because married people are considered safer drivers than single people.

Your age also plays an important role in deciding your car insurance premium. People under the age of 25 years have to pay higher premium while people in the age category of 50 or 60 years have to pay less premium.

3. Model of the Vehicle

The IDV of your car which is decided upon the market value of the car and depreciation rate, plays an important role in deciding the premium amount of car insurance policy. Thus, the more expensive your car, the more premium you pay. So your insurance company will charge a high premium for imported brands, SUVs, high end Sedan, etc. Similarly, the premium amount for diesel vehicles is generally higher.

4. Your Driving Record

Your driving record plays an important role in deciding your car insurance premium. People with a car history of accidents, tickets for rash driving or Driving Under Influence (DUI), higher number of claims, etc. are charged with high amount of premium. While a person with a clean driving record will be charged the low rate of premium.

5. Security Device

The premium amount of your car insurance policy largely depends upon the risk related to the car. Higher the risk, higher will be the premium and that’s why you have to pay less premium for cars with security devices.

6. Engine Capacity of  the Vehicle

The premium amount of the car insurance policy also depends on the engine capacity of your car. For example, a car with a powerful engine like V8 will be charged more premium while a car with a V4 engine will be charged less premium.

Tips for buying a Cost Effective Car Insurance Policy

  • Compare different car insurance and choose the most cost effective policy without compromising on benefits
  • Add riders only if required
  • Buy online

So go through the above mentioned factors which affect the car insurance premium and make the purchase of car insurance policy, an economical deal. A well informed decision while buying a car insurance policy will not only allow you to buy a cost –effective policy, but will also allow you to take advantage of your policy.

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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