How does the insurance premium of the used car vary?
As they say, the law remains the same for everyone. The Motor Vehicles Act, 1988 mandates all vehicle owners to have a valid car insurance policy. Lack of which can, not only lead to hazardous financial situations but also attract penalties from the traffic police department.
When you have a car insurance policy, you can potentially save yourself from a lot of unwanted situations both mentally and financially. It doesn’t really matter whether you are driving a new car or a used car, you must have a valid insurance policy for your car. Here are some of the factors that impact the insurance premium of a used car.
Type of Coverage
If you wish to calculate car insurance premium, one of the factors that would heavily impact it is the type of coverage that you wish to have. In India, you can either opt for a third-party coverage plan or a comprehensive plan. A third-party coverage plan is a barebones policy that offers coverage for accidents involving third-party individuals or properties. This helps the policy keep its premiums down. A comprehensive plan, on the other hand, offers a lot more coverage. Apart from the third-party coverage, it also offers coverage against own damage. No points for guessing that you will end up paying slightly higher premiums for a comprehensive plan.
IDV, Age, and Depreciation
If you were to use a car insurance calculator, one of the first parameters that go into the calculator is IDV or Insured Declared Value. In simple words, it is the highest amount that an insurer is willing to pay for your car in case it faces total loss. If the car of a policyholder is stolen or is damaged beyond repair, the IDV is the maximum amount that the policyholder can expect from the insurer. Since it is one of the leading factors, playing around with this can seriously change your premiums. The car’s age is also a crucial factor that comes into the picture regarding IDV and insurance premium. As the vehicle ages, its value reduces to depreciation (natural wear and tear), and so does its insurance premium.
In the event that your vehicle has some additional safety features or devices installed, you can seek for concessions. If your car has additional car locks or anti-theft systems installed, the chances are high that you will be able to reduce your premiums by a small margin. The only condition being, that the device must be a part of the approved list by the ARAI or the Automobile Research Association of India.
Another key factor that gets into the car insurance calculator is the location. While buying or renewing a policy you might need to mention your residence. For instance, if the location is prone to natural calamities, you will most likely end up paying slightly higher premiums. Likewise, the premium costs are higher in metros as well, since the vehicle density is high which might lead to more accidents.
Picking up the right engine type is a confusion that most of the car owners have. And it impacts the car insurance premium as well. If you were to choose a CNG-fitted car over petrol or diesel engine, your premium might vary accordingly.
For a car insurance calculator, add-ons or riders is another input parameter. They are essentially additional features that you can plug into your existing plan to increase the effectiveness of the policy. More riders, higher premium.
Mentioned above are some of the leading factors that come in to picture when you want to calculate car insurance premium. With the help of a car insurance calculator, you can deduce the premium without breaking much sweat. Taking a close look at these factors will help you save some money on your car insurance policy.
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