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What Determines Comprehensive Car Insurance Premium and How to Calculate It?

By Juhi Walia
17 August 2022, 6:17 PM

Comprehensive car insurance is a blessing for car owners as it secures them both financially and legally. It is specially made for all private car owners to get complete protection against all mishaps.

The premium for a comprehensive car insurance policy is usually higher than that of standard car insurance policies as it provides extensive insurance coverage for both third-party liabilities and own damages. This includes coverage for risks such as theft, accidents, natural calamities, fire, etc.

Furthermore, when you have comprehensive car insurance, the insurance company pays for the repairs and replacement of the car in case of total or partial loss or damage to the vehicle. This also accounts for the higher premium cost.

In this article, we discuss the nitty-gritty of the premiums you pay for your new car insurance. You will also learn about the factors that determine the premium amount, how to calculate the cost of premiums, and tips to reduce the premium. So, let's get started!

Determining Factors for Comprehensive Car Insurance Premium

The following determinants affect the cost of premiums:

Car's Model 

One of the important determinants of the premium cost is the value of the car parts. Therefore, you must have noticed that luxurious cars like BMW, Mercedes, Audi, etc., have higher prices than budget cars like Maruti, Swift, Santro, etc. As such, the car's brand, model, and variant play an important role in determining the car insurance price list.

Car's Present Market Value 

Old cars are charged less premium. This is because as the car ages, the Insured Declared Value (IDV) or car's present market value also decreases. Therefore, the lower the car's IDV, the less is its premium.

Age of the Car Owner

Individuals who own cars below the age of 25 fall in the bracket of risky drivers as per the norms of car insurance in India. Therefore, the premiums are higher for car owners falling under this age group.

Type of Fuel 

If you own a CNG car, you will likely pay a higher premium than those paid by owners of regular petrol and diesel cars. CNG cars require high maintainence and are at higher risk. Hence, the owners of these cars have to bear the expensive premiums.

Registration Location 

In urban areas, cars are usually insured at a higher premium since the traffic density in cities is greater than in suburban areas. Moreover, the chances of accidents are also greater in urban locations that are more prone to accidents.

Therefore, the location of your car registration (Zone A/ Zone B) greatly determines the premium car insurance cost.

No-Claim Bonus (NCB)

Car insurance companies provide an NCB if you do not claim in a policy year. It is a rewarded discount on your premium. You can avail of this when you renew your car insurance and if you have not raised any claim in the previous year.

Remember, the No claim bonus (NCB) increases with every claim-free year and provides you up to a 50% discount on the premium.​

Other Discounts

You can avail the benefits of cheap car insurance with a discounted premium. You can earn various discounts, therefore reducing the cost of the premium. For instance, if you are a member of the Automobile Association of India (AAI), you get the benefits of discounts. 

How to Calculate Comprehensive Car Insurance Premiums?

You can calculate the premium of a comprehensive car insurance policy with a car insurance premium calculator.

It is an online tool that helps you to compute the correct premiums you need to pay for your car. All you need to do is enter the car details. This includes your car’s make, model, variant, manufacturing year, registration date, RTO location, NCB status, etc. Make sure the car insurance details you enter are accurate.

After you put in these details, you can easily get customised results from this online tool.

When you are aware of the correct amount of premium you need to pay for your car, you can choose the most suitable car insurance quotes. As such, you can customise your plan based on your budget and needs.

However, you don’t always need a car insurance premium calculator to calculate the premium amount. The following simple formula can help you to get the right amount:

Own Damage Premium Amount – (NCB + Discounts) + Cost of Add-ons + Third-Party Premium as Fixed by the IRDAI = Comprehensive Car Insurance Premium.

Determining Factors That Lower the Car Insurance Premium

Being mindful of the following incidents will help you to keep a check on your premium and eventually reduce it—

  • Driving sensibly and earning a No-claim bonus can fetch you less premium on your car.
  • If you are a member of the Automobile Association of India (AAI), you gain access to discounted premiums and a range of other services.​
  • Installing an anti-theft device in your car also eliminates the risk of theft. The no-theft risk reduces the car insurance claims and makes room for discounted premiums.
  • Dropping all the unnecessary add-on covers is a wise choice as they double the amount of your premium. Choose only those that you need.
  • Renewing your car insurance policy before its expiry date will reduce your premium because the longer you delay the renewal process, the more you need to pay for the inspection. You may also lose your NCB, thus adding to your costs.
  • Not raising any claims for minimal expenses incurred through a minor accident is another conscious decision that helps reduce your premium.

In Closing 

The premium for comprehensive car insurance is high. However, when comparing car insurance prices for both types of insurance and the level of damages they insure, you will realise that comprehensive car insurance offers more value than third-party car insurance

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1. Which factors influence the comprehensive car insurance premium?

IDV, Cubic Capacity (CC), Place of registration, model type, car’s age, type of insurance cover, and NCB retention can affect your car's comprehensive car insurance premium.

2. How can I pay a comprehensive car insurance premium online?

You can make online payments for your car insurance premium​ through Netbanking, Credit Card, Debit Card with ATM PIN or Debit Card with 3D secure, or even through UPI.

3. Does the ARAI-approved car-theft system reduce comprehensive car insurance premiums?

Yes, this device enhances your car’s security and prevents the risk of theft, thus reducing the insurance premium.

4. Does the NCB reduce the car insurance premium cost?

Yes, the NCB is a discount awarded for not raising a claim in the previous policy year. You can avail of this discount during your insurance renewal. 

5. 5. How to calculate the comprehensive car insurance premium?

The easiest way to calculate your car insurance premium is through a car insurance calculator in India.

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