Car insurance is something that any present or potential car owner must plan and think about. And with ample options available in the market today, one must carefully understand the nitty-gritty of how car insurance works in order to make an informed decision. Given the number of accidents taking place on Indian roads every day, purchasing a comprehensive vehicle insurance online to cover damages in case of any unfortunate incident has become the need of the hour.
To help you understand car insurance better, here is a detailed explanation of the factors impacting your insurance premiums.
The Location Geography
This is an understandable part of how premiums work. If you reside in a region where the traffic is slow, such as a small town or rural area, the premium that you must pay for the given coverage and benefit will be lower than what you must pay if you live in a crowded metro city. This is simple risk assessment, as insurance companies deem a car in a large city to have a bigger risk of being in an accident than one that is in a smaller place.
This is just another way of risk assessment done by insurance companies while deciding car insurance premiums. If you are young and under 25, you pay the highest, and people who are between 50 and 65 years of age pay the least. Women do not have to pay as much as men drivers because research shows that they are safer drivers than men. Also, single people are singled out as risky, and if you are married, you are likely to be paying much less premium than someone who is not.
Type of Car
The type of car you drive bears an impact on the kind of insurance you can buy. For instance, if you drive a diesel car, which is supposed to be more heavy duty and costlier (your IDV will be more expensive too), you will need to pay more to insure it than one that runs on petrol and is much lighter.
Age of the Vehicle
The age of your car has a lot to do with your insurance premium. Here’s how:
The older your car gets, the more value it loses. Therefore, if the car is less valuable, it may be less expensive to repair or replace it. This makes the insurance cheaper since the risk to the motor insurance company of paying out a large claim is reduced. Hence, the premium for the old vehicles is lower, whereas, a brand-new car comes with a higher premium.
Type of Coverage
This is one of the key things to look out for when choosing a car insurance plan. The kind of coverage a plan offers determines the car insurance premium. So, if you go for a comprehensive plan that provides benefits to the owner in case of a range of accidents, the plan is likely to be costlier.
Installed Security System
The car insurance premium takes into account the details of your car. Specifically, if it has a security system installed, the car insurance premium is likely to increase.
Customized Car Insurance Plans
This is another vital factor as far as car insurance premium is concerned. A number of insurance companies provide vehicle insurance plans which are tailor-made to suit all your requirements. So, if personal accidental coverage is important to you but does not occur in any of the plans that you like, you can have them draw up a special plan for you. Of course, for this, you do end up paying a higher premium.
No Claim Bonus
In order to encourage safe driving, car insurance companies offer an incentive to drivers who drive safely. This incentive is in the form of a bonus which you get in case you don’t make any claim in a particular year. It is known as ‘No Claim Bonus’ and is given at the time of renewing your car insurance policy. The amount is deducted from your own damage premium, and you are only required to pay the balance amount. This benefit is given for each year in which you have not claimed any financial loss from your motor insurance company.
Car insurance premiums go up and down depending on these factors. If you are considering buying one, simply go to the internet and compare premiums of different vehicle insurance plans online against the coverage they offer and also the benefits. It’s the easiest way to make an informed choice. One great tip is to include add-on covers while getting a new policy or just renewing an existing one.