How Does Car Type Affect Car Insurance Premium?

When setting car insurance premiums, insurers consider several factors— the car's make, model, age, coverage type, and its repair costs. Newer cars with advanced safety features often have lower premium prices, while luxury vehicles usually have higher insurance prices because of their expensive parts and repairs. This article explains how different car types impact insurance costs so you can make an informed choice when purchasing your car and its insurance.

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Impact of Car Types on Your Car Insurance Premium

The main way your car's make and model impact the car insurance price comes down to its market value. The higher a car's cost, the higher its insurance premium. Four-wheelers are categorized mainly into the following 3 types:

1. Hatchbacks: Hatchbacks are among the most popular car types in India. This car body type comprises four doors along with an additional rear hatch that provides access to the boot space. Hatchbacks are generally designed with compact bodies and can comfortably accommodate five passengers. Some popular hatchbacks in India include the Maruti Suzuki WagonR, Maruti Swift, Tata Altroz, Hyundai i20, etc.
2. Sedans: Sedans provide the utmost comfort and convenience for both front and rear passengers. A sedan has a longer body than a hatchback and a separate compartment for the boot. Maruti Suzuki Dzire, Honda City, Hyundai Verna, & Skoda Slavia are some popular sedans in India.
3. Sports Utility Vehicles(SUVs)/Multi Utility Vehicles(MUVs): SUVs are both passenger vehicles & off-roaders. With a taller bodyline and higher ground clearance than hatchbacks & sedans, SUVs have better handling and offer drivers a commanding view of the road. On the other hand, MUVs are designed for the utmost utility, featuring increased interior space and larger seating capacity. They can carry extra passengers & luggage and provide better mileage than similarly sized SUVs.

Since a hatchback's market value is typically less than that of a sedan and SUV/MUV, you will pay a lower insurance premium. For a sedan, the insurance price will be a bit more than that of a hatchback. SUVs are among the most expensive ones to insure among all passenger car segments.

While these parameters are valid for an own-damage car insurance policy, third-party insurance premiums are fixed by IRDAI (Insurance Regulatory and Development Authority of India) based on the car's engine capacity.

• Less than 1000 cc cars have the lowest premiums- Rs. 2094 ( approx.)
• Cars with the engine capacity of more than 1000 cc but less than 1500 cc- Rs. 3416 ( approx)
• More than 1500 cc cars have the highest premium- Rs. 7897 (approx.)

Other types of cars include the Coupes & Convertibles, with ex-showroom prices starting from Rs. 8.25 Lakh and Rs. 90.90 Lakh, respectively. Car insurance premiums for these two car types will again vary based on the actual car, type of coverage, and fuel options.

Car Insurance Premium Based on Fuel Type

Besides the body type, the fuel type of a car also impacts insurance costs:

• Petrol: Cars with petrol engines are the most used passenger cars. Normally, their costs and repair expenses tend to be on the lower side.
• Diesel: In general, cars with diesel engines are more expensive than petrol cars and have higher maintenance costs. As a result, their insurance premiums are slightly higher than that of petrol cars.
• CNG: Cars with CNG fuel type have higher premiums compared to the petrol variant of the same car.
• Electric Vehicles: EVs have lower third-party insurance premiums, which are fixed by IRDAI, but their own damage premiums can be higher due to expensive battery replacements.

Other Important Factors That Impact Car Insurance Premiums

Besides the type of the car, there are other key factors that influence car insurance premiums. Have a look:

Coverage Type

Generally, car insurance is of two types: third-party insurance or comprehensive car insurance. While a third party policy is mandatory by law, comprehensive insurance also covers damages to your own car, which is why its premium is more than that of third party insurance.

IDV

IDV in car insurance (Insured Declared Value) is the amount the insurer will pay in case of a total loss of the insured car or if it gets stolen. You can set your car's IDV while buying or renewing car insurance. While a higher IDV implies a higher premium amount, choosing a lower IDV will keep the premium low but also decrease your claim amount in case of car theft or total loss.

Car Registration Location

Four-wheeler vehicles that have their registration in metropolitan zones will have premium costs that exceed those registered in tier-2 or tier-3 areas. This is because metropolitan cities have heavy traffic conditions and, consequently, higher chances of accidents, resulting in elevated premium costs.

Driving History

Insurance providers offer lower premium prices for safe driving because they assess individuals as less risky to insure. Thus, if you drive responsibly, your policy premium will likely be lower.

Add-ons

When buying a comprehensive policy, you have an option of selecting car insurance add-ons for enhanced protection. Remember that add-ons are optional covers thus, you will be paying an additional premium.

To Sum Up

The type of a car plays a major role in determining car insurance premium costs. You should opt for a model with affordable repair costs and limited theft incidents together with safety features. Also, it is a great idea to compare quotes from multiple car insurance companies to get the right coverage as per your requirements and budget.