How to Calculate Car Insurance Premium?

In car insurance, the premium is the amount that you have to pay to the insurer on a periodic basis to avail financial coverage for your car. While third-party insurance comes with a standard premium amount that is determined by the IRDAI, the premium for comprehensive car insurance differs from one insurer to another.

This premium payment is made against the policy contract, according to which the insurer guarantees that your car repair bill will be taken care of, provided you pay the premium amount decided upon. This premium is calculated on different factors, which will be discussed in the article below.

How to Calculate Car Insurance Premium Online?

Following are the steps to use an online car insurance calculator to find out the premium amount of your car policy.

  • Step 1 – The first step is to provide accurate car details, like its age, registration date, variant, model, the city you live in, etc.
  • Step 2 – The next step in using an online car insurance calculator is to click on the Get Quote option. Doing this will take you to the page where you can select the insurance type you want.
  • Step 3 – You have the option of either selecting a third-party insurance policy or a comprehensive car plan. While third-party insurance will safeguard you financially from the damages that are caused to a third party, a comprehensive car policy will offer coverage for your car, too.
  • Step 4 – If you are changing your insurer, you have to provide the details of the previous car insurance.
  • Step 5 – Your new car insurance premium calculator will now show you the premium rate for your car.
  • Step 6 – In case you opt for a comprehensive car policy, you can select add-ons like engine protection, NCB protection, nil depreciation cover, etc.

How to Calculate Car Insurance Premium – Formula

Cost of Premium = Premium for Own-damage – (discounts + No Claim Bonus) + IRDAI fixed third-party liability premium + cost of add-ons.

Factors that Determine the Value of the Policy Premium

  • The Car’s Manufacture Year – Depending on the year that the car was manufactured, the Insured Declared Value of the car decreases as the car gets older. The lower the IDV, the lesser the premium amount will be.
  • Location Where You Want to Insure Your Car – If you live in Zone A, which includes all the densely populated cities, the risk of an accident will be higher, which is why the premium cost will be more. However, if you belong to Zone B, which is the rest of India, the premium cost will be less.
  • The Car’s Cubic Capacity – This refers to the engine capacity of the car and the more the cubic capacity of a car, the more maintenance and fuel it will require, which is why its premium cost will be more than cars with less cubic capacity.

Other important factors that determine the car insurance premium include driving and claim history, make and model of the car, fuel type, add-ons included in the policy, NCB modifications and security devices added, and deductibles.

Conclusion

With all this information, you can easily calculate and compare premium quotes before you choose an insurer to protect your car. This will help you find a policy that offers the best value for money.

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