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  • Car Insurance Premium? Know How These 5 Factors Affect It

    Published on July 26, 2019

    Car insurance premium is the amount of money an individual pays for the chosen car insurance policy. The insurance premium is the amount charged by the insurer for the policy. Your car insurance premium is the income for the insurance company. Insurer allows the policyholder to make the premium payment annually. Insurance premium also turns as a liability to the insurer as they have to claim the coverage for the policy. Car insurance premium varies depending upon the selected coverage plan.

    The need for buying car insurance is mandatory in India according to the Motor Vehicle Act 1988. Thus, buying a car insurance policy is a must. However, the premium paid towards a car insurance policy affects the pocket of an individual. To balance this situation one has to be aware of the factors which impact the car insurance premium.

    Following factors are the guidelines that impact the car insurance premium rates:


    The area you live in affects the rates of your car insurance premium. Urban areas have a large population. Therefore, the chances of damages and thefts are more in those areas, which results in you paying more premium. Residing in metro cities would also require you to pay higher premium rates as compared to anywhere else in India.


    The rates of car insurance changes depending upon the coverage of the insurance policy. The policy with more coverage charges more premium and vice versa. There are two types of car insurance plans – comprehensive car insurance and third party car insurance. In third party car insurance, the coverage is only applicable to the involved third party in a road accident. So the rates are less in this plan. However, comprehensive car insurance coverage is provided to both the parties involved in a road mishap. Always address the needs of your vehicle instead of opting for a cheap car insurance policy.

    Voluntary Deductible

    One can reduce their premium cost by opting for a Voluntary Deductible. It is a part of the claim amount that will have to be settled by you. The insurance company is not liable to pay for your share of the Deductible. While it is a great way to reduce your premium, you can opt for it if you are sure you can pay your share of the claim amount without any hassles.

    The Type of Engine

    The insurance premium cost is calculated on the basis of two elements, third party coverage and own damage coverage. The third-party cover is calculated based on the cubic capacity (cc) of your vehicle’s engine while own damage cover is based on the Insured Declared Value, cubic capacity of your vehicle’s engine, location and age of your vehicle.

    Car Insurance Calculator

    A car insurance calculator enables an individual to select the best insurance policy according to their requirements. It helps an individual to evaluate their insurance needs and helps to opt the appropriate plan. A car insurance calculator helps to compare plans from different insurers and make the final decision. Each insurance company uses its own method for setting the premium rates. It is done online. By providing some details, the customer can calculate the premium amount for their vehicle.