Variables that Affect Motor Insurance Premium

Unlike other forms of insurance, buying a third party liability coverage in a motor insurance is mandatory under law. What you pay on your motor insurance premium depends not on one but on many variables such as age, sex, car model, type of coverage, deductibles, etcetera. Here are the key variables that affect the motor insurance premium.

Read more


third-party-rates

Third-party rates expected to increase* soon. Renew today!

third-party-rates

Third-party rates expected to increase* soon. Renew today!

Stay home & renew car insurance in 2 minutes

No documents required
Get Car Insurance starting at only
₹2072/year*
Processing
Other options
Get Car Insurance starting
@ only 2072/year*
  • Save up to 85%* Lowest Car Premiums

  • 20+ Insurers To Choose From

  • 51 Lakh+ vehicles insured

*TP price for less than 1000 CC cars. All savings are provided by insurers as per IRDAI approved insurance plan. Standard T&C apply.

Top Plans
Cashless Garages
253
Plan type
Comprehensive
Starting from
₹ 2,727
Check premium
Claim Advantage
Self-Video Claims
Reimbursement Within 7 Working Days For Non-Cashless
Cashless Garages
268
Plan type
Comprehensive
Starting from
₹ 2,757
Check premium
Claim Advantage
Self-Video Claims
Reimbursement Within 7 Working Days For Non-Cashless
Cashless Garages
1024
Plan type
Comprehensive
Starting from
₹ 2,868
Check premium
Claim Advantage
Spot Claims Upto Rs. 30,000
Repair service at select cashless garages
See more plans

Above-mentioned prices are for a 7-year-old Maruti WAGON R AVANCE LXI (998 CC) registered in Gurgaon and 15 days before expiry of previous policy

1) Car Make, Model and Variant

The car that is to be insured is perhaps the most crucial factor that decides how your policy will be priced. On the part of the insurer, premium signifies a proportionate value of the replacement cost needed in case the car gets stolen or is totaled in an accident.

The obvious implication that follows is, the more expensive a car, higher the premium. Also, the more riskier a car, higher the premium. That is the reason SUVs have a higher premium than Sedans. In a somewhat parallel sense, a CNG fitted car needs you to pay a higher premium than a petrol/diesel car.

2) Insured Declared Value

Insured Declared Value is the current market value of your vehicle. As a convention, IDV keeps on decreasing as the vehicle ages and so does the annual premium. IDV depends not only on how old your vehicle is but also on how well you have maintained it.

3) Type and Degree of Coverage

As mentioned at the start of this article, having a third party liability coverage in a motor insurance is mandatory under law. However, there are other types of coverages in a motor insurance such as collision coverage. It is not mandate but ideally more useful to the insured. A comprehensive coverage consists both types of coverages.

The cover can further be extended to the electrical and non-electrical accessories fitted in your car at an additional premium of 4% on its value.

4) Deductibles

Also known as Voluntary Access, a deductible is the amount the insured agrees to pay out of his pocket at the time of claiming a file. Assume that a person has opted for Rs 10,000 deductible on his policy. Now consider an eventuality wherein he had to incur a loss of Rs 60,000 as his car got wrecked against a tree.

In such a case, his insurer is liable to pay him Rs 50,000. But why would anyone want to opt for a deductible? Well, that is because the higher deductible you opt for, higher discount you'll get on the premium.

5) Anti-theft Device

If your car is installed with an ARAI approved anti-theft device, you are entitled to get an additional discount (2.5% on the OD Premium). The reason is obvious, an anti-theft device makes your car less liable to theft and hence proves to be a less riskier deal to insurance companies.

6) Discount

Insurance companies offer an additional discount on premium to some professionals (Defense Personnel, Doctors and Govt. Employees). Members of the Automobile Association are also entitled to get such a discount.

7) Claiming

For every claim free year, the car insurance company rewards the insured with a percent discount on the renewal premium. This is called as No Claim Bonus (NCB) and it keeps on increasing every claim free year up to a maximum of 50% discount. NCB belongs to the owner and not the car and is transferable to another car or policy.

In contrast, every time the insured makes a claim, the car insurance company penalizes him/her with a Loading Charge of 10-20%.

8) Age and Sex

For the insurer, the calculation is simple, the riskier deal you are, the higher will be your premium. That's why youngsters have to shell out a higher premium than grown ups and married couples. Behind the wheels, men have proven themselves to be a riskier deal than women. Thus, the insurers reward women a lower premium than men.

9) Source

The smartest way to save on premium is to buy the auto insurance online via portals like Policy Bazaar, after making a smart comparison between car insurance premium quotes from the leading insurers. An online auto insurance saves you time, money and a lot of effort.

Written By: PolicyBazaar - Updated: 12 July 2021
You May Also Like
  • Transferring Car Insurance from One Person to Another

    Transferring Car Insurance from One Person to Another An integral part of selling a car, for both the buyer and the seller, is ensuring a successful car insurance transfer to the new owner. But sadly, most people have...

    read more
  • 9 Secrets That Your Motor Insurance Provider Won’t Tell You

    9 Secrets That Your Motor Insurance Provider Won’t Tell You Due to the dangerous driving conditions, it is compulsory to have third party insurance for every vehicle plying on Indian roads. It ensures the overall saf...

    read more
  • Money Saving Advice for All Car Owners

    Money Saving Advice for All Car Owners After a dream home, a dream car is your second-largest purchase that you make in your lifetime. But the expense does not cease when you drive off the car dealer's lot. Read mor...

    read more
  • Difference Between Comprehensive Insurance and Third Party Insurance

    Difference Between Comprehensive Insurance and Third Party Insurance Comprehensive insurance is insurance coverage that pays for the repair or replacement of vehicle damages resulting from an incident. Comprehensive ca...

    read more
  • Types of Motor Insurance

    Types of Motor Insurance The word Motor broadly covers a lot of classes of vehicles plying on the roads. These may be two-wheelers like scooters and motorbikes, three-wheelers or four wheelers like private cars, jeeps, ...

    read more

Find similar car insurance quotes by body type

Hatchback Sedan SUV MUV
insurance-ka-superhero
Search
Car insurance save up to 85
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Calculate your car IDV
IDV of your vehicle
Calculate IDV
Calculate Again

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.

Policybazaar lets you compare premium prices from 20+ Insurers!
Compare Prices

Why buy from Policybazaar?

  • 24x7 Claims Assistance
    NEW
  • Cashless Assurance
  • 3-Day Repair Assurance
  • Free Pickup & Drop
  • Self Video Claims
  • Windshield Claims At Home
View Plans

Car insurance articles

Recent Articles
Popular Articles
Can You Claim Car Insurance with a Temporary Registration Number?

19 May 2022

When you buy a car, you get a temporary vehicle registration...
Read more
KP in Car Insurance

17 May 2022

KP in car insurance refers to the Key Protect add-on cover that...
Read more
Manual versus Automatic Car Insurance - Effect on Insurance Premium

12 May 2022

When it comes to transmission systems in cars, there are two...
Read more
Everything You Need to Know About Private Car Insurance

09 May 2022

A car insurance policy is not just a mandatory requirement but...
Read more
All You Need to Know About CNG Car Insurance

06 May 2022

If you are planning to get a CNG kit fitted in your car or...
Read more
Car Depreciation Calculator
If you are looking to purchase a new car or planning to sell your existing one, it is important to know how...
Read more
Transferring Car Insurance from One Person to Another
An integral part of selling a car, for both the buyer and the seller, is ensuring a successful car insurance...
Read more
Check Car Insurance Status Online on Parivahan Sewa/ RTO?
In India, buying car insurance is a compulsion for every car owner. It doesn’t matter if you are an excellent...
Read more
Getting Your Duplicate Car Insurance Policy is Easy-Here’s How!
Losing important documents, such as your car insurance documents, can be daunting. In such a state of affairs, the...
Read more
Multiple Ways To Check Your Car Insurance Status Online
All insurance companies in India now have a digital presence. It not only makes it easier to buy insurance online...
Read more