What are the Factors That Contribute to Your Car Insurance Policy’s Premium?


Insurance is mandatory for all vehicles registered in the country be it for private use or commercial use. While it is a regulation that needs to be complied with, you need to know the different types of car insurance plans.

A third-party policy is the one that is the bare minimum policy that can be bought. It safeguards you against any legal liabilities that might arise due to an accident or collision. It has a limited scope, but a comprehensive policy is the one that is available for broader coverage to your car which includes own damage cover. However, when it comes to deciding which policy you need to buy, the premium is a crucial factor that is considered.

So, which are those factors that impact car insurance premiums? This article dives deep into such essential factors on which the premiums are based –

Geographic location

When you purchase car insurance online, the first factor in determining the premium is the geographic location. The location of where you reside and where your car is registered is instrumental in determining the premiums. This is because the region where your car is driven impacts the risks prone while driving. For these reasons, a car that is registered in a metro region has higher premiums as compared to non-metro cities. For this reason, the insurance premiums are categorised into two parts based on geographic location.

Personal factors

Personal factors also impact your policy premiums. For instance, women are considered to be safer drivers and hence the premiums are lower as compared to men. Similarly, married individuals are required to pay lower premiums. The age of an individual is an essential factor that either increases or lowers the premium costs. Be it a car insurance purchase or car insurance renewal online, these factors come into play to impact the premium.

Engine capacity and the type

Next, the engine capacity of your car determines how much you need to contribute to the premium. This is due to the difference in repair costs for different types of engines. For instance, diesel engines require higher repairs and thus pushing up the IDV. On the other hand, a CNG or petrol engine costs lower for its repairs. Apart from the type of engine, its capacity also plays a crucial role. The insurance companies price policies higher based on slab rates for third-party policies.

Type of policy and customisations

The policy you purchase has the highest impact on the premium based on the coverage it offers. Since third-party policies offer limited coverage, the premiums are priced accordingly. On the contrary, comprehensive policies offer a wider coverage thereby costing more. In addition, customisation to your comprehensive plans further pushes the premium cost. This is due to additional coverage that comes at an incremental price. So, when customising your insurance cover, it is essential to make use of a car insurance calculator that helps to know the impact of any customisation on your insurance premium.

These are some important factors that can help you estimate how the policy might cost based on selection. Keep in mind these elements in your next policy purchase or renewal. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.

Pax Heber
the authorPax Heber