The fine print of our car insurance online or offline policies contains much information- the terms and conditions, exclusions, and special cases. However, the premium is always stated upfront. Often, however, we hear only a number, never fully comprehending how that number arrived at or what the calculation process truly entailed.
The following factors determine the cost of car insurance:
The vehicle’s IDV (insured declared value) vehicle make and model, as well as its age, engine’s cubic capacity, geographical region etc can be a part of the conclusion. *
3 car insurance premium factors:
Your car insurance premium is the total of the three coverages listed below:
- Third-party protection:
If you own a car in India, you must have TPL coverage. Third-party liability (TPL) insurance covers any damage to a person or property caused by your insured vehicle that results in financial loss or demise of the person.
However, TPL does not cover your repair costs, so it’s always a wise idea to get a plan that covers losses caused by damage to your vehicle. The TPL premium is determined by the vehicle’s capacity and is set by the insurance regulatory authority of India (IRDAI). #
- Own damage (OD) insurance:
The OD cover is optional but extremely useful. It reimburses your expenses if your car is damaged due to natural events such as earthquakes, fires, storms, or an accident. The agreement is that the higher the insurance declared value (IDV), the higher the premium, and vice versa. As a result, as your vehicle ages, its IDV decreases. *
The OD premium is calculated as a percentage of the IDV as determined by the Indian motor tariff. It is wise to calculate the premiums using an online car insurance premium calculator to have affordable plans that cater to your needs. *
- The formula for calculating IDV:
IDV = cost of accessories (if any) + showroom price of your car – depreciation value as determined by the manufacturer (IRDAI) #
As a result, the formula for calculating the OD premium amount is as follows:
Own damage premium = IDV X [premium rate (as determined by the insurer)] + [add-ons (for example, bonus coverage)] – [rewards and benefits (no-claim bonus, theft rewards, and so on)] *
- Personal accident insurance:
This component of your new car insurance premium extends beyond your vehicle and protects you from accidents and mishaps resulting in disability. This is essential to be fully protected if the chances of disability are higher than almost any other outcome. You may also increase the sum insured to cover unnamed passengers. The premium for this coverage rises as the sum insured rises. *
- Riders from other teams:
Finally, there are riders. These riders, also known as car insurance add-ons, offer various types of protection and services at a low cost. Engine secure, for example, protects against waterlogging damage.
Roadside assistance will send help if your vehicle shuts down in the middle of the street, NCB= protection allows you to make two claims without losing your no claim bonus, and more. Each rider strengthens their car insurance online or offline policy, ensuring you are protected in all situations. *
* Standard T&C Apply
** Currently, there are 2 tax regimes in India – new and old. To get the tax benefit you desire, choose the correct one after consulting an expert. You can opt for a regime change during the next financial year.
# Visit the official website of IRDAI for further details.
## All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
