Premium is one of the most important factors that one considers while buying car insurance. But have you ever thought about the factors which might be affecting it? Here are a few factors which affect the premium of your car insurance policy.
Value of Your Vehicle
The market value or the Insured Declared Value (IDV) of your car is one of the main deciding factors of the premium. If you have a car which is expensive, your premium automatically shoots up. SUVs, imported cars, high end sedans and other luxury cars have higher premiums than smaller cars.
The motor insurance companies check for the driving record of the proposers. Records for rash driving, drunk driving, accidents etc. are checked and people having such records are categorized as high risk drivers. People with a clean driving record have to pay lesser premiums than high risk drivers which can be judged by the number of claims you make in your previous policy,which is a good indicator of your driving skills.
Insurance companies have pre-determined zones termed as insurance zones. These are determined taking vulnerability to accidents, theft, natural calamities etc. into consideration. If the proposer resides in area prone to such incidents, the premium charged is more. Therefore, people living in urban areas have to shell out more premiums for their vehicles than people living in rural areas.
Profession of the proposer plays a very important role in deciding his car insurance premium. Marketing and sales professionals, politicians etc. are considered to be working in a high risk environment pay higher premiums than teachers, bank managers, etc.
Purpose of Your Vehicle
Car insurance premium rates depends on the purpose of the vehicle. People using their cars for personal purposes have to pay lesser premiums than those who use them for commercial purposes.
The capacity of your car’s engine is also one of the deciding factors when calculating the premium. Higher the cubic capacity of the car engine, higher is the premium. The Indian Motor Tariff Act has stipulated minimum amounts of rates to be used for calculating the premiums for vehicles with different cubic capacities.
No Claim Bonus (NCB)
If you do not make a motor insurance claim for one year, you are eligible for a No Claim Bonus (NCB) offering you a certain percentage of discount on your premium.
Your car is one of the major investments you make in your life and you should check on all these factors before you choose the best car insurance plan.