5 things that impact your car insurance premiums
As you all are aware that Car Insurance is mandatory in Indian Laws as per Motor Vehicle Act. So, while purchasing your Car insurance ensure that your insurance premium is reasonable and provides you with all necessary benefits. There are many factors that affect your car insurance premium. Some factors are beyond anyone’s control. While, some factors are controllable. There are few things that you didn’t know impacted your Car Insurance Premiums:
#1 IDV, Coverage amount, voluntary deductibles and compulsory deductible
- IDV: Insured Declared Value is the highest Sum Assured fixed by the insurance company. IDV is given at the time of theft or loss of vehicle. The insurance company will compensate their policy holder if your car undergoes complete loss.
- Coverage Amount: Coverage amount is the maximum amount paid by the insurance company for the loss of insured vehicle. Every coverage of a policy has its own limit. You can adjust it as per your needs and requirements. The premium amount is based on your coverage amount. Higher the coverage amount, higher will be your premium amount.
- Voluntary Deductible: Voluntary deductible is usually fixed by policyholder themselves. It plays a significant role in your premium amount. Here, the policyholder will fix a certain amount as their deductible. This amount they will pay during every claim. For example, Mr. Raj has met with a car accident. Their claim sums up to ₹10,000. The policyholder decides to pay ₹3,000 of the claim. This amount is said to be voluntary deductible. The remaining ₹7,000 will be paid by the insurance company. Thus, voluntary deductible provides sufficient percentage of discount on your premium.
- Compulsory Deductible: Compulsory deductibles is that amount which is fixed by the insurance company on the premium amount. This amount has to be paid to get your damage claim. For example, the policyholder decides to fix their voluntary deductible to be ₹3,000. In that case, policyholder will get a discount of about 20-25% on their insurance premium amount. But, they will have to pay the compulsory deductible amount decided by the insurance company.
#2 Driving record and geographical boundaries
- Driving record: Your driving record depends on the company and your recent traffic violation or accident record. Some insurance companies look back for three years of your record. While some of them look back for 5 years or more. So, the company’s quotation and your driving record have a massive impact on your insurance premium amount.
- Geographical boundaries: Your geographical boundaries, i.e., where you live also have a huge impact on your premium. Some localities are more accident prone. Insurance companies investigate about your crime rates, number of claims made in a year. These insurance companies are more aware about your neighborhood.
#3 Whether your car has any anti-theft device
Due to increase in number of car thefts in our country, people prefer installing an anti-theft device for the security of their cars. Installing anti-theft device not only provides you security but also lowers your premium amount by offering discounts. This is because there will be less chances of your car being stolen, thus less claims will be made. Therefore, insurance companies encourage people to install an anti-theft device.
#4 Discount for membership of any recognized automobile associations
If you are a member of Automobile Association of India, you can get discount on car insurance premium amount.
#5 Discount for vintage car
In case of any vintage or classic car, ensure that while availing an insurance policy, the coverage should be as per car owner’s own requirement. For example, your vintage car is taken for rallies or to events on frequent basis. Then, the policy should cover any damages caused during the events. So, the insurance company provides coverage for damages caused due to restoration of the car or for public events. It also offers flexible premiums depending on the mileage of vintage car.
Thus, no insurance company will offer low rates to everyone. But there are some insurance companies who will offer low rates only to you. You need to search for them. So, look out for insurance companies who offer low rates of premium, discounts and claims on time.