Factors that determine your car insurance price

Car insurance is a mandatory expense, but that doesn't mean it has to drain your wallet every time you insure your vehicle. Understanding the factors that affect car insurance prices can help you make informed decisions, ensuring you get the coverage you need without breaking the bank.

In this guide, we'll delve into the subtle aspects of determining your car insurance price.

Why do you need a car insurance?

Here are some key reasons why you should have car insurance:

Legal obligation: Vehicle insurance is a mandatory requirement as per The Motor Vehicles Act, 1988. Non-compliance can lead to monetary penalties and legal issues. Thus, make sure to buy vehicle insurance and keep the policy active by renewing it before its expiry date.

Financial security: From minor dents to major accidents, car insurance offers vital financial support for repairs or replacements, shielding your wallet.

Theft protection: In case of theft, your car insurance compensates for the Insured Declared Value (IDV), acting as a financial safety net.

Personal accident cover: Mandatory for unforeseen events, this cover provides up to Rs.15 lakhs for accidental injuries or death, offering peace of mind. Note that this cover must be purchased separately.

What is a car insurance premium?

The car insurance premium is the amount you pay to purchase or renew your car insurance policy. It's essential to remember that paying the premium doesn't guarantee claim payment; the insurance company assesses claims based on the terms and conditions outlined in the policy wordings, which act as a contractual agreement.

Factors that impact car insurance premiums

To make informed choices about your car insurance, it's crucial to know the factors influencing premium rates. Here are ten key points that can impact your car insurance price:

Make, model, variant: The genetic makeup of your vehicle significantly influences your insurance premium. Luxurious sedans might turn heads on the road, but they also raise eyebrows in insurance offices. The basic composition, manufacturer, type, and engine capacity all play a role. Choosing a humble hatchback might be lighter on your wallet.

Your vehicle's age: Just like a fine wine, older vehicles come with perks. Depreciation, the natural wear and tear, is less for older cars, translating to a lower Insured Declared Value (IDV). This means it costs less to insure an old faithful than a shiny new set of wheels.

Your location: Living in a bustling metro might mean more adventures on the road, but it also signals higher insurance costs. Urban settings, with their traffic woes and congested roads, are perceived as riskier. Tier three cities offer a breath of relief, both in terms of traffic and insurance premiums.

Policy type: The basic third-party policy is the legal guardian for your vehicle, covering third-party liabilities. But for a comprehensive embrace, there's the comprehensive policy, catering to own damage and third-party liabilities. Adding extras through add-ons beefs up your coverage but at an added cost.

Add-ons: Extra security comes at a price, especially in insurance. Add-ons like zero depreciation and passenger cover enhance your shield and hike your premium. Choose wisely, opting for only those add-ons that truly safeguard your interests.

No claim bonus (NCB): Being a cautious driver pays off. Insurers reward a clean claims slate with a discount on your premium during renewal. Don't be quick to raise a claim; weigh the NCB benefits before making that call.

Anti-theft devices: Installing a certified anti-theft device endorsed by the Automotive Research Association of India (ARAI) could shave off some premium. It's a small investment that could pay dividends in reduced insurance costs.

Deductibles: Opting for a Voluntary Deductible allows you to contribute a predetermined amount to a claim. This makes the insurance company liable for less, resulting in a reduced premium. It's a smart way to share the burden and save on costs.

Seller's influence: Agents and dealers might nudge you towards policies with hidden costs. Purchasing directly from insurers removes the middleman, ensuring you get a policy tailored to your needs without unnecessary add-ons.

The digital advantage: Digital Insurance: Embrace the digital age for insurance. Digital-first insurers like ACKO operate with lower operational costs, offering comprehensive coverage at competitive rates. Check out quotes online for a cost-effective insurance solution.

Additional factors influencing car insurance costs

Apart from the primary factors mentioned above, other elements can influence the cost of car insurance:

Fuel type: The type of fuel your car guzzles affects the insurance price. Diesel and CNG fuel types might incur higher costs due to variations in Insured Declared Value (IDV) and additional coverage for CNG kits.

Car value: The Insured Declared Value (IDV), reflecting the current market value of your car, directly impacts the premium. Higher car value means a higher insurance cost.

Memberships: Being a part of certain associations, like the Automobile Association of India, could give you a small discount. These perks often fly under the radar but can contribute to savings.

Driving history: A clean slate regarding past claims can lead to a No Claim Bonus (NCB), gradually reducing your premium. A history of responsible driving is your ticket to discounted insurance rates.

Conclusion

In the intricate world of car insurance pricing, knowledge is your most potent tool. Use this guide to decipher the nuances, ensuring you find a policy that not only fits your budget but also provides comprehensive protection. Remember, striking the right balance is crucial—neither underpay nor overpay; just protect yourself wisely.

In a similar vein, for two-wheeler enthusiasts, understanding bike insurance and its influencing factors follows a parallel narrative. By comprehending these subtleties, you can secure your ride without breaking the bank.

Visit ACKO to kick-start your journey towards comprehensive protection for your car today!

Frequently asked questions

What does the ACKO car insurance policy cover?

ACKO's car insurance policy covers third-party losses, accidents, fire, theft, natural and man-made calamities, and rat bite damages.

What is not covered under the ACKO car insurance policy?

ACKO's car insurance policy does not cover pre-existing damages, normal wear and tear, illegal driving, or driving without valid documents, among others. Please refer to the policy wordings for an exhaustive list of exclusions.

How can I calculate my car insurance premiums?

You can use ACKO's car insurance premium calculator to easily and swiftly check your premiums. Just enter the required details and click 'Get Price' to generate the total premium you must pay to get a car insurance policy.

What is the insurance renewal process in ACKO?

To renew your car insurance policy, visit the website or download the app, enter the car details, select the plan, and make the payment online.

Shagun Sharma is an independent business journalist.

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