Why Do Car Insurance Prices Vary Across Insurers?

In India, car insurance prices vary from one insurer to another. The Insurance Regulatory and Development Authority of India (IRDAI) sets uniform rates for third-party policies. However, the premiums for own-damage policies differ, mainly because of the differences in how insurers assess risks and price policies. Let’s explore it in detail below:Read more

Key Reasons Why Car Insurance Online Quotes Differ

Here are the major reasons behind discrepancies in car insurance premium prices across insurers:

1. Different Risk Assessment Models

   To estimate premium prices, each car insurance company uses a unique underwriting and risk evaluation model and considers the following factors:

   • Driver's age and profile
   • Claim history
   • Vehicle type and fuel variant
   • Area of registration (traffic density, rate of accidents, theft risk)

   The weightage of these factors varies across insurers, so the final car insurance premium also differs.

2. Claim History & No Claim Bonus (NCB) Impact

   The No Claim Bonus is a discount of 20% to 50% on insurance premium that insurers give to policyholders who do not raise any claims in their policy period. While the NCB slabs are standardised by IRDAI, here is how insurers vary:

   • How they verify past claims
   • How they price policies for those with the claim history
   • Extra charges applicable due to past claims

   This is how two insurers might quote different own damage premiums even with the same NCB percentage.

3. Add-ons and Their Pricing

   Add-ons in car insurance play a crucial role in premium differences. Here are some most valuable add-on covers you can opt for with an own damage or comprehensive policy:

   • Zero Depreciation
   • Return to Invoice (RTI)
   • Engine & Gearbox Protection
   • Roadside Assistance

   Each insurer use different pricing structure for these add-on covers. While some insurers bundle add-ons, others price them separately. Hence, it impacts the final quote.

4. Selecting the Insured Declared Value (IDV)

   IDV in car insurance is the total compensation the insurer provides to the policyholder in case of a total loss, which is theft or damage beyond repair. IDV directly affects the premium cost. Insurers may:

   • Offer different default IDVs
   • Allow policyholders to adjust the IDV within the approved range

   While a higher IDV increases the premium, a lower insured value implies reduced premium. As a result, there are differences in car insurance quotes.

5. Claim Settlement & Service Quality

   Insurance companies that invest significantly in quick claim processing, higher claim settlement ratios, and an extensive network of cashless garages may charge slightly higher premiums to ensure better service for the customers.

6. Repair Cost & Network Garages

   Insurers estimate car repair costs based on the following factors:

   • Tie-ups with repair garages
   • Pricing of spare parts
   • Claim history

   If the projected repair costs are higher, the premiums will be on a higher side.

7. Discounts, Promotional Offers & Pricing Strategy

   While some insurance providers offer online-only discounts and special pricing & promotional offers for first-time buyers, others prioritise long-term profitability. This can lead to comparatively higher premium prices.

Wrapping Up

Different car insurance quotes across insurance providers reflect varying risk appetites, service levels, and pricing strategies. Hence, instead of just choosing the cheapest option, you should compare your car insurance options from different insurers online. It will help you find the right balance between coverage, price, and claim support.