If you are going to buy car insurance for the first time, a number of queries must be going around in your mind. The first thought that every insurance buyer come across is about the premium. Car insurance is expensive, but if you know how to calculate and reduce the premium, you will be able to find the best cover for your vehicle at the most affordable price.
There are a few easy ways to reduce your car insurance premium. But, before that, you need to know the factors that determine the premium of your four-wheeler insurance.
How to Calculate the Premium of Your Car Insurance
There are a number of factors on which the premium of your car insurance will be determined. Here are the four most important categories based on which the insurer will assess the risk and underwrite your car insurance premium.
- Vehicle Related Risks
The parameters that determine the premium of car insurance include the make, cubic capacity, fuel type etc. Vehicles like SUV and the commercial ones often attract higher premiums as these types of vehicles are more prone to accidents or thefts. Petrol cars have a 10% to 15% lower premium than diesel vehicles. At the time of renewal, the age of your car as well as its depreciation will affect the premium that you will pay.
- Driver Related Risks
Drivers are often mostly responsible for the damages caused to a vehicle. So, the age and the profession of the driver are taken into account while determining the car insurance premium. In case your car is driven by multiple drivers, the premium will go up.
- Location Related Risks
The area of registration also affects the premium of your car insurance. If you live in a densely populated urban area or near highways, the premium will go up. Premiums will also be high if your area has a record of frequent car theft.
- Claims History Related Risks
The last but not least factor is the history of claims. If you already have claimed for your car, the premium will be higher from the next year.
Keep in Mind: If you buy your car insurance online, it will be easier for you to calculate the premium on your own by using a premium calculator that you will find on the aggregator’s portal or on the insurer’s website.
How to Reduce the Premium of your Car Insurance
There are a number of ways by which you can reduce the premium of your vehicle insurance. Let’s find out a few of them:
- Voluntary Deductibles
Deductibles are amounts over and above which a claim is paid out by the insurer. The premium of your car insurance will reduce to approx. 30% if you agree to settle petty claims for small damages voluntarily from your own pocket.
- Discounts for Security Features
You can avail a 2.5% discount on your car insurance premium if your vehicle has an ARAI (Automotive Research Association of India) proved security device attached to it. Security devices like anti-theft alarms or immobilizers reduce the chances of vehicle thefts; hence the premium amount also goes down.
- No Claim Bonus
Insurers provide the no claim bonus benefit, every year, as a record of your good driving. This can reduce your premium by nearly 50% every year if you have not made any claim in the previous year. If you sell your car and buy a new one, the no-claim bonus gets transferred to your new insurance policy and you can avail lower premium payouts.
Keep in Mind: Buying car insurance online can help you get the most pocket-friendly plan for your vehicle. There are a number of insurance aggregators that will allow you to compare car insurance quotes online. Once you compare the plans from various insurers on the same platform, you will be able to pick the most suitable plan for your vehicle. Another advantage of buying car insurance online is the transparency of cost structure. Moreover, as you compare car insurance quotes from multiple companies, you will be able to see who is providing the best deal at that moment.
The Bottom Line
There are several ways to reduce your car insurance premium. You can settle for voluntary deductibles, buy security devices for your vehicle or earn the no claim bonus for the reduction of your insurance premium. However, the most important thing, before going for the final purchase, is to compare car insurance quotes from various providers. It will not only help you find the best deal but will also save a lot of your money at the same time.