A Car Insurance Premium is the total amount you pay to the insurance company for the insurance coverage that the company provides as per its car insurance policy.
Once the insurance company receives this amount, it starts providing you the financial risks against accidents or damages incurred as per the policy terms and conditions.
What is the premium for car insurance?
Premium of a car insurance premium depends on a number of factors. These factors include the type of policy you buy, the make, model and variant of the car, age of the car, fuel type, whether there were any claims in the previous policy years, existing no claim bonus, if any, whether the current policy has lapsed or not, add-ons selected and premium discounts available.
It is important to understand how these factors affect premiums: Type of policy – comprehensive car insurance plans attract higher premiums than third party policies considering the wide coverage they offer.
The make, model and variant of the car determines the value of the car. The higher the value, the higher would be the premium. Age of the car is also a key factor in computating the depreciated value of the car. The older the car, the lower would be its value and hence, the associated premium.
Petrol cars are less expensive than diesel ones and so are their premiums. If there have been claims in the previous year, the no claim bonus would amount to zero. The premium would be higher in such case as it is subjected to the no claim discount.
If there are other policy discounts, they would lower the premium outgo. Additionally, if the policy has lapsed, the renewal premium would be higher.
What is No Claim Bonus (NCB)?
Under comprehensive car insurance plans, if you do not apply for a claim in a policy year, you earn a no claim bonus.
This no claim bonus is allowed as a discount in the renewal premium on event of policy renewal. The no claim bonus starts at 20% and it increases after every consecutive claim-free year. After the first two claim-free years, the bonus rises to 25%.
If you are unable to make claims in three consecutive policy years, the bonus would be equivalent to 35% and further for four consecutive years, it amounts to 45%. Moreover, if no claims are availed for five and more subsequent policy years, you can earn a no claim bonus amounting to 50%.
This no claim bonus is used to reduce the premium for own damage covered under the policy. Premiums for third party liabilities do not attract any discount and remain fixed.
Is my No Claim Bonus (NCB) transferable?
Yes, the accumulated no claim bonus is transferrable from one car insurance policy to another. However, the bonus is non-transferrable to another individual.
The no claim bonus would be under your name until fully utilized. In order to facilitate the transfer of your no claim bonus, you can connect directly with the Insurance companies team of experts via mail or calling there tollfree no.
How much is my premium expected to increase with add-ons?
Add-ons are an addition to the usual coverage benefits which widen the coverage scope of a car insurance policy. On choosing add-ons, you shall be subjected to an additional premium on each add-on you select.
The proportion of premium increase depends on the chosen add-ons and their respective additional premiums. Hence you would have to choose add-ons to find out how much the premium increases by adding them.
Different add-ons attract different premiums and the premiums also largely vary across insurance companies. While picking the add-ons, compare their rates across car insurance plans offered by various insurers.
To draw a precise comparison , you can visit any broker’s online website and find the rate of add-ons on the best car insurance plans. Such brokers are tied-up with various leading car insurance providers and it thus allows users to compare the premium rates of add-ons online via its website in an easy and effective manner.
What coverage limits meet my needs?
The coverage under a comprehensive car insurance policy is termed as the Insured Declared Value. This value is calculated by deducting depreciation (based on the car’s age) from the market value of the car (excluding registration and insurance costs).
While purchasing a car insurance policy, you must compare the IDVs of various available plans. A suitable coverage level is defined as the one which is near to the market value of your car.
This is because in car theft or total loss of the car, the IDV is paid. If the IDV is not sufficient , you would be subjected to a low claim and a financial loss. Thus while choosing IDV, ensure that the value is closer to your car’s market value after factoring in depreciation.
If I am using the car in a particular city, what premium rate is applied?
The premium of your car insurance policy is also affected by the place of registration of the car. If the car bears the registration in a metropolitan city, the premiums shall be higher.
Alternatively, if the car having the registration of a metro city is used in a non-metro city , the premium for a metro city would be applicable.