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Why do car insurance premiums differ?

By Finserv MARKETS - Oct 23,2019
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According to the Indian Motor Vehicles Act, it is mandatory for all car owners in India to purchase a car insurance policy. A comprehensive car insurance policy protects the car against burglary and damage caused due to accidents, theft, fire, flood, or terrorism. Additionally, it provides coverage to the driver in case of an accident. A comprehensive car insurance policy also takes care of third-party liability or the amount payable to the third party in case of an accident. Therefore, it is essential for every car owner to purchase a car insurance policy. While purchasing a car insurance policy, car owners should make a note of various factors that affect the cost of car insurance. This can help them purchase a four wheeler insurance with lower premium and wider coverage.

However, at times you would wonder why is the insurance premium for your new car different than your previous or older car. Let us understand the details.

What affects the car insurance premium?

Type and Capacity of Engine

  • Cars that run on diesel usually have higher insurance premiums as compared to cars that run on petrol or CNG. This is because the diesel engine vehicles are expensive and have high Insured Declared Value (IDV). IDV in car insurance refers to the maximum claim the insurance company will have to pay if your vehicle is damaged beyond repair or is stolen. Therefore, higher IDV results in higher insurance premiums in case of diesel engine cars.
  • Additionally, the engine capacity of your vehicle also plays a crucial role in determining the premium amount of your car insurance policy.

Vehicle model

The model of your car will have an effect on the insurance premium rate. The fancier your vehicle, the higher will be the insurance premium. This is because insurance companies also consider factors such as, an estimate of your vehicle’s repairing cost and how much it is likely to damage another car in an accident.

Safety Rating

Vehicles with a high safety rating can be insured at comparatively lower premiums. Safety features such as airbags, automatic seat belts, and traction control not only make the car safer but also reduce its cost of insurance. If the car is well-equipped with safety features, it reduces the chances of injury to the driver and fellow passengers in case of an accident. This helps in lowering the premium cost significantly.

Coverage Purchased

Your insurance premium will largely depend upon the coverages you opt for. Wider the coverage, higher will be the premium cost. If you are struggling to decide the right coverage, you consider seeking advice from your insurance agent.

While purchasing a car insurance policy, you must compare various policies offered by different insurance providers. This will allow you to avail a car insurance policy that best suits your needs. With the help of leading insurance providers, you can purchase car insurance online and also opt for online car insurance renewal.

A Car Insurance available at Finserv MARKETS comes with key features such as round-the-clock assistance, hassle-free claim settlement and special add-on covers. Additionally, you can initiate your Car Insurance Renewal from the comfort of your home. These features give Car Insurance an edge over other policies offered by different financial institutions.

To know more on car insurance in depth, you can check out these blogs:

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522