Although car insurance is compulsory in India, it does not mean you have to empty your wallet every time you insure your car. If you know the factors that influence your car insurance premium, you can save money by purchasing an affordable car insurance policy at an affordable premium. In this blog, we will discuss the factors that affect your car insurance premium.
7 Factors that Affect Your Car Insurance Premium
The car insurance premium plays a significant role when you buy or renew car insurance. Hence, you can go through the following factors that help the insurer to determine your insurance premium, as it will help you choose an ideal plan at an affordable rate:
1. Type of Car Insurance
One of the crucial factors that determine your car insurance premium is the insurance type you choose. Although third-party insurance is mandatory in India, it does not provide extensive coverage. Hence, the premium increases when you opt for a comprehensive insurance plan. However, purchasing a comprehensive plan gives you extensive coverage and includes standalone damage and third-party insurance benefits.
Gold Rate
Thursday 09 Jan. 2025
2. Location
Another significant feature that influences your car insurance premium is your location. For instance, if you reside in an area with low traffic, you can buy car insurance at a lower premium rate. On the other hand, if you reside in a big or metro city, you have to pay a higher premium amount, as such areas are busy 24×7.
3. Engine Type
Do you have a diesel engine car? Well, in such a scenario, you have to pay a higher premium than a petrol-engine car. It is because petrol engine cars are more affordable than diesel engine cars, and it directly impacts the Insured Declared Value. Hence, the higher the car’s price, the higher will be the IDV, leading to an increased premium amount.
4. Your Driving Record
Insurance companies consider your driving experience and record to determine the car insurance premium. When you have a good driving record, the insurer considers you a less-risk prospect. It allows you to negotiate with the insurance company for a comprehensive car insurance plan at a discounted premium rate.
5. Financial History
Another crucial factor that helps insurance companies determine the car insurance premium is by considering your financial history. They check your credit score to analyse your financial history. If you have a good credit history, the insurer will ensure you can pay the car insurance premium on time without lapsing.
6. Add-On Coverages
When you decide to include add-ons in your standard comprehensive car insurance plan, you have to pay an extra premium to get the benefits of these add-ons. There are multiple add-ons which you can include in your car insurance plan to receive wider coverage. For instance, ACKO Insurance offers a No-Claim Bonus protection as an add-on, which you can include in your standard comprehensive plan.
7. Installed Safety Features
When you have an efficient car lock or have installed an anti-theft security system, the insurance company may offer you a discount on the car insurance premium. The anti-theft devices and car alarms raise an alarm so you can protect your car from theft. Hence, the insurance company identifies the chance of car theft is low, enabling you to negotiate for a comprehensive car insurance plan at an affordable premium.
Final Words
Henceforth, once you understand the factors that affect the car insurance premium, you can easily decide which insurance to choose. It also gives you insights into things you can focus on to lower the premium amount in the long run and save money. In addition, you can compare the coverage offered by different insurers, keeping these factors in mind and select the right car insurance plan.
