Car insurance is the insurance that we all have to save us from the unwelcome costs. However, many of the car owners are puzzled by the high cost premiums of their car insurance. The reality is that the prices of insurance are not random. The final cost depends on a set of factors. Being aware of these will enable you to make smarter decisions, particularly during renewal time and money saving.
1. Type Of Car Insurance You Choose
The kind of car insurance policy that you take affects the premium. Third-party car insurance, which is popularly referred to as third-party insurance, is the cheapest as it only covers damages to other people. Comprehensive insurance is more expensive and offers greater coverage, as it includes own damage car insurance, along with protection against theft and natural or man-made disasters.
2. Insured Declared Value (IDV)
IDV is the present-day car value. The better the coverage, the higher it is. It also raises the premium. Selection of an appropriate IDV is essential since too high or too low a value will give inappropriate cost and protection for the vehicle. Hence, IDV in car insurance is one of the most important factors.
3. Age Of The Vehicle
Newer vehicles tend to be more expensive to insure since the replacement and repair costs would be higher. The premium for bumper-to-bumper insurance decreases as your car gets older due to depreciation. At the other end of the scale, there can also be increased premiums on old vehicles since there is a greater probability of breakdowns.
4. Engine Capacity (CC)
Larger capacity cars are considered big and more powerful, hence they are more risk-prone. Hence, the car insurance premiums of bigger engine cars are always higher than those of small ones.
5. City or Location Of Registration
When the car is registered in a high-traffic area or metro city, the premium is likely to be high. The number of accidents, thefts and claims is higher in urban areas, leading to increased risks for the insurers.
6. No Claim Bonus (NCB)
This is one of the largest premium reducers. If there are no claims made during the last policy year, you are given an opportunity to save up to the sum of your own damages premium over time. The easiest and most effective method to save money is to have a claim-free record.
7. Driving History
Low-risk drivers are those who have a clean driving record. Exposure to accidents, traffic offences or past claims may drive your premium up. Driving responsibly is a long-term payoff.
8. Safety Features In The Car
Automobiles with anti-lock braking systems (ABS), airbags, rear cameras, and anti-theft systems are easier to drive. In most instances, insurance companies reward such features with a lower premium as they minimise the chances of causing serious damage.
9. Add-On Covers Selected
Add-ons like zero depreciation, engine protection, roadside assistance, and consumables coverage make your policy stronger but at the cost of the premium. Although it is helpful to use add-ons, select only what you really require.
10. Fuel Type
Diesel vehicles tend to pay a slightly higher premium in comparison to petrol cars, as the costs of the engine are higher. On the contrary, electric cars can also have lower premiums since they contain fewer moving components and the risk of maintenance is reduced.
11. Annual Mileage
The risk is going to be higher with each additional kilometre you drive. Vehicles that drive more in a year will be more likely to get into an incident or to be damaged in some way, and as a result, their insurance premiums will be higher too.
12. Policy Tenure
Choosing long-term car insurance plans will help you keep the same premium and avoid yearly increases. Yet, it is still possible to be flexible at the time of the yearly renewal by changing or tailoring the coverage.
13. Claim History
Frequent claims indicate a higher risk. Even if you have comprehensive insurance, making multiple claims over consecutive years can increase your premium and reduce your NCB benefits.
14. Custom Modifications
Premium can be increased due to aftermarket additions such as alloy wheels, body kits, or performance upgrades. These changes raise repair costs and risk, which insurers factor into pricing.
15. Timing and Method Of Renewal
It may be cheaper to buy a car insurance renewal online compared to an offline renewal. Online renewals allow easy comparison, access to discounts, and faster processing. On-time renewal also prevents inspection fees or policy lapses, which may cost more.
How To Reduce Your Car Insurance Premium
- A claim-free record will help to gain the maximum NCB
- Select the appropriate IDV to be renewed
- Avoid unnecessary add-ons
- Install security and anti-theft measures
- Compare policies carefully before renewing
Most of the insurers like HDFC ERGO currently have flexible policies that provide you with the option of tailoring your coverage depending on your requirements at a reasonable price.
Conclusion
Your car insurance premium is influenced by factors that are far beyond the vehicle you drive. The kind of cover you select and the decisions you make will have an impact on the total price. These are the key factors that you need to be aware of in order to be able to make a proper decision and avoid paying more to protect your car.
Having the proper balance between cost and protection will give you a sense of security every time you go out driving.