How Car Insurance Premiums Are Calculated: The Factors That Matter -

Irrespective of whether you buy car insurance online or offline, it is a type of policy that is not a one-time buy. Most people who have purchased car insurance, or have a car know that these policies expire and need to be renewed. For most of these policies, you have to pay with a single premium. Moreover, since you need to buy these policies at defined intervals, you have to pay for them each time you renew your policy or buy a new one.

When such is the case, you should be aware of the various factors affecting car insurance prices and the premium that you are expected to pay.

Factors Affecting Car Insurance Premiums

It is now common to buy car insurance online. But whether you buy online or offline, it is ideal to get a better idea of the premium you are expected to pay for the plan. To do so, you can use a car insurance calculator available online.

As a consumer, it may prove helpful for you to know the factors that affect your car insurance prices. Here are some of the factors affecting car insurance premiums that consumers should be aware of.

  • Car make and model

The car insurance prices will depend on the type of car you own. Every car model differs from another in some aspects, and these differences will influence the premium you have to pay for the car. For example, the premium for a sedan may be higher than the premium for a hatchback. Within the same type of car, insurance premiums for one model may cost higher than the other. *

  • Modifications

Many people like to customise their cars and make them feel more like their own. But know that these customisations, or modifications, may cost you more than their price. When you make modifications to your car, it may lead to an increase in the price of car insurance, i.e., you may have to pay a higher premium as compared to when the car is not modified. *

  • Policy add-ons

One of the factors affecting premiums of any sort of insurance policy is the way you customise your policy. Add-ons are often available with policies so that policyholders may be able to enhance the features of their plans. These add-on features can lead to an increase in your premium costs, whether you buy car insurance online or offline. *

  • Location

Your place of residence, i.e., where your car is can also influence your insurance costs. For example, cars being driven in metro cities are considered to be more prone to damage. This is especially owing to more density of cars, higher population, and resultant traffic, and other scenarios. Thus, premium costs in these cities may be higher than non-metro or rural areas. *

  • Vehicle’s age

Owing to depreciation, the value of your vehicle can go down as the years pass. In direct correlation to this, the car insurance prices may also decrease. Thus, you may end up paying lesser for car insurance as time goes by. *

  • No-claim bonus

If you have not made any claims on car insurance in the previous year, you may be eligible for a no-claim bonus from your insurer. It is offered to you in the form of a concession for your future insurance premium. You may enquire with your insurance provider about how you may be able to avail of a no-claim bonus. *

  • Anti-theft devices

Anti-theft devices are meant to protect your car. If your car has an additional layer of security, it may help you bring down the premium costs.

While all these factors, and more, may affect the premium of the car insurance, it is advisable for customers to use a car insurance calculator to get a better idea of what they may have. A comprehensive calculator may take these factors into consideration and make the calculation easier for you. *

* 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.

By Rehan

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