A car insurance policy offers coverage to the vehicle owner. A car insurance premium is the money you pay the insurance company. This is for a set period of time. After this, your insurance company will take care of the coverage mentioned in the insurance policy. This is done till the end of the policy period.
What are the ways to determine your premium plan? Do you need to call the agent and ask them to do it for you? Or, can you calculate the insurance policy of your car online?
This article will teach you simple things to keep in mind before buying car insurance online. It will tell you how simple calculation and comparison are. It is way easier than reaching out to a bank or an agent.
Types of Insurance Premiums
- Third-party Liability Insurance
This insurance includes the coverage of a third party. Assume a vehicle collides with yours. The other vehicle suffers damage. The insurance company has to pay for damage to the other vehicle. This insurance is mandatory in India, according to the Motor Vehicles Act of 1988.
- Comprehensive Motor Insurance Policy
This policy gives coverage to the insured and third parties. Sometimes, unfortunate events like accidents take place. In that case, the insurance company is liable for the insured and the third party.
Both types of insurance are helpful. Consider them if you are planning to buy a new car. If you have not taken a policy for your already existing car, do so now.
Essential Factors that determine your Car Insurance Premium
- Insured Declared Value of the Vehicle (IDV)
The IDV is the maximum claim you can ask for damages to the car. The insurance provider will give you the amount after reducing deductibles. The provider will pay you when repair costs exceed 75% of IDV. IDV of the vehicle affects the premium. You pay more premium for a new vehicle. The formula for calculating IDV is:
IDV= (Manufacturer’s listed selling price – depreciation) + (Accessories not included in listed selling price – depreciation) excluding registration and insurance costs.
- Age of the Car
Due to wear and tear, the value of a car reduces over time. Insurance providers use the vehicle’s age to decide the car’s market value. New car launches can lower your car’s market value too.
- Cubic Capacity of an Engine
The capacity of an engine is determined by its cubic capacity. The car insurance premium is slightly higher for a new car than for an old one. The premium in third-party insurance is the same for old and new vehicles.
Geographical zones in India are divided into Zone A and Zone B. These zones are used to calculate the premium for car insurance. Zone A comprises New Delhi, Chennai, Bengaluru, Pune, Ahmedabad, and Hyderabad. Zone B includes the rest of India. There are more accident-prone areas in Zone A. So, the residents of Zone A pay higher premiums than Zone B.
The Insurance Regulatory and Development Authority(IRDAI) has changed insurance policies. A policyholder can pay the premium according to usage. Let’s understand this in detail:
- Pay as you Drive
A customer pays a premium according to usage. A vehicle that spends more time on the road is more prone to accidents. Thus, you pay more premium for more use of the car. You pay less premium for less usage of the vehicle on the road.
- Pay how you drive
A customer with a good safety record can pay a lower premium. A driver with rash driving, challans and traffic tickets has to pay a higher premium.
- Floater Policy
You can have a single policy for all your vehicles. The premium will be slightly higher than that of other policies.
How to Calculate and Compare Car Insurance Premium Online
Nowadays, it is easy to calculate the estimated amount of an insurance policy online. How? Through a car insurance calculator. Key in essential information like your car registration number. You will get the information at once. Enter the IDV and get the best quotes.
You can compare the coverage provided by using the online insurance calculator. Visit the website of any insurance provider and get a quote quickly. This will give you a fair idea of your best premium plan.
Information required for new cars for premium calculation online
- Car’s registration details
- Car model
- Manufacturing year
- Owner’s details – name, gender, marital status, contact details
- Policy commencement date
Information required for used cars for premium calculation online
- Ownership details of the previous car
- Particulars of the claim of previous policy
- Current car insurance details
Benefits of using Car Insurance Calculator
- Ease of Comparision
Insurance providers offer different types of policies. An insurance calculator allows you to compare insurance policies. This makes it easier and more efficient to find information. By comparing, you can choose the best policy for you.
- Make a wise choice
The insurance calculator gives you the factors that affect your car insurance premium. You can add on or discard additional insurance cover. You can monitor your premium payment with ease. You can make better choices.
- Know the right IDV of your Car
It is essential to know the IDV of your car. This is important to calculate the details of the premium. The calculator helps you arrive at the right amount of IDV.
After reading through this article, you must have learnt more about necessary insurance policies. The car insurance policy protects you and the vehicle. The online calculator helps you get a hassle-free car insurance policy quote. You can calculate and compare car insurance policies online using simple steps.
If you need more guidance and assistance with selecting the right insurance policy, visit Piramal Finance. This online platform is what you need to learn everything about relevant financial products such as vehicle insurance, personal loans, credit cards, and more.