Does Car Insurance Premium Differ According to Regions in India?

Imagine you and your friend, living in two different cities, purchasing similar car insurance plans from the same insurer.But the premium you two pay is different. Wondering why? This is because the motor insurance price is different for different regions and is based on the place where you have registered your car. Let us understand this concept in detail.

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Car Insurance Price Depends on Different Regions

There are many factors on which the price of a car insurance policy depends. One such factor is the geographical location of the car. Insurance companies charge a premium based on the region where the car is being used. Four wheeler insurance premiums are different in different regions of India.

For example, two people living in Mumbai and Lucknow respectively will have to pay different insurance premiums even if they purchase the same four wheeler insurance plan from the same insurer. The main reason behind this difference is the city of car registration which is Mumbai for one and Lucknow for the other one.

The four-wheeler insurance premium in a city that has more traffic and is more prone to accidents & burglary will be high as compared to a city that has less traffic. This is because the liability of the insurer will increase in a traffic-prone city where the possibility of vehicle damage or loss will be more. Thus, they will charge a higher car insurance price at such places and vice versa.

Car Insurance Zones in India

The IRDAI or the Insurance Regulatory and Development Authority of India has divided India into two zones, namely Zone A and Zone B. A four-wheeler insurance premium is estimated for a region based on these zones.

While Zone A includes tier A cities like Mumbai, New Delhi, Kolkata, Bengaluru, Chennai, Hyderabad, Pune and Ahmedabad, Zone B includes the rest of India.

Simply put, motor insurance premiums for cars registered in different zones will be different.

Car Insurance Rate Calculation for Different Zones

While calculating motor insurance rates for different zones, insurers consider two major factors. First, the age of the car and second, the engine's cubic capacity.

Given below is a table that shows the percentage of IDV (Insured Declared Value) taken into consideration to calculate the premium of Zone A and Zone B based on these factors. For the unversed, IDV is the current market value of a particular vehicle that a policyholder receives in case of a total loss at the time of claim settlement. These motor insurance rates have been set by the IRDAI.

Motor Insurance Premium for Zone A

The vehicles registered in Zone A are more prone to accidents and theft as these cities are more crowded and have heavy traffic when compared to cities in Zone B. Therefore, the four-wheeler insurance price in these cities is high due to the increased liability of the insurer.

The car insurance premium in Zone A is calculated as follows:

Age of the Car Cars less than 1000cc Cars between 1000cc to 1500 cc Cars more than 1500cc
Below 5 years 3.127% of the IDV 3.283% of the IDV 3.440% of the IDV
5-10 years 3.283% of the IDV 3.447% of the IDV 3.612% of the IDV
Above 10 years 3.362% of the IDV 3.529% of the IDV 3.698% of the IDV

Motor Insurance Premium for Zone B

The cities that come under Zone B are less prone to road accidents and theft as these cities are less crowded as compared to cities in Zone A. Therefore, the comprehensive insurance premium in this zone is less.

The motor insurance rates in Zone B are calculated as follows:

Age of the Car Cars less than 1000cc Cars between 1000cc to 1500 cc Cars more than 1500cc
Below 5 years 3.039% of IDV 3.191% of IDV 3.343% of IDV
5-10 years 3.191% of IDV 3.351% of IDV 3.510% of IDV
Above 10 years 3.267% of IDV 3.430% of IDV 3.596% of IDV

Other Factors Affecting the Motor Insurance Premium

Apart from the geographical location of your vehicle, its IDV, car’s age and engine displacement, some other factors also affect the motor insurance price. They include:

  • Car Make and Model: The make and model of the car also affect the price of a four-wheeler insurance policy. For instance, the premium of a luxurious sedan will be more as compared to that of a hatchback car.
  • Type of Coverage: The type of coverage you are planning to buy impacts your vehicle insurance rates. If you are purchasing third party insurance, your premium will be lower as compared to the comprehensive insurance that covers both third party liabilities and own damages.
  • Add-on Covers: A motor insurance premium also depends on the additional covers that can enhance the coverage of a car policy. The more add-ons you include in your standard car plan, the more will be its premium.
  • Safety Features: Your four-wheeler insurance premium will reduce if you have installed safety features, like an anti-theft device, in your car. In such cases, the chances of a claim reduce, thus, reducing the car insurance price.
  • Voluntary Deductibles: Opting for deductibles can also reduce the premium of your car policy. A voluntary deductible is an amount that you voluntarily agree to pay during claim settlement. The rest of the claim amount is paid by the insurance company. This lowers the liability of the insurer and thus, your motor policy premium will reduce if you opt for a voluntary deductible.

Wrapping Up!

Car insurance prices vary as per the region where the car will ply. So the next time you are confused about a change in your car insurance premium, make sure to consider the region of your car registration. You can also compare third party insurance as well as comprehensive insurance rates based on your region for your four-wheeler on Policybazaar.com.

Written By: PolicyBazaar - Updated: 11 May 2022
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Note: This is your car’s recommended IDV as per IRDAI’s depreciation guidelines.asdfsad However, insurance companies allow you to modify this IDV within a certain range (this range varies from insurer to insurer). Higher the IDV, higher the premium you pay.

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