Things To Check In A Car Insurance Policy Wording To Calculate Premium

It is an obvious thing to get your car insured after buying one. Also, it is mandatory to get your vehicle insured as per Motor Vehicles Act, 1988. For the purpose of insuring the vehicle, you have to buy an insurance policy from insurance service provider and pay premium for the purpose of making the policy stay in effect. Premium is paid once annually and it should be paid at the time of renewal every year.

Policies are bifurcated into two broad sections:

  • Third party component in which liability arising to third party due to collision or accident is compensated for.
  • Comprehensive policy, which covers the damages caused to own car as well as third party in case of any loss caused by your vehicle.

The premium is calculated on IDV i.e. the insured declared value. IDV is the current market price or the ex-showroom price of the car. Ex-showroom price is the cost incurred by the dealer to get the vehicle from the manufacturer. It is the cost price of the vehicle plus the local/state taxes paid. It excludes registration and insurance charges.

In case the vehicle is more than 5 years old, the IDV will be a decided value between the policyholder and the insurance company.

However, IDV is considered only in case you take a comprehensive policy. Premium rates in case of third party liability are specified by IRDA.

Apart from IDV, age of the vehicle and discounts / no claim bonus is taken into account while calculating the premium.

Once the vehicle is put to use, the IDV is adjusted as per the depreciation charged on the car. Following are the rates of depreciation:

Depreciation Rate

 

Vehicle used
5% Up to 6 months
15% More than 6 months up to 1 year
20% More than a year up to 2 year
30% More than two year up to 3 year
40% More than three year up to 4 year
50% More than four year up to 5 year

In case the vehicle is more than 5 years old, the IDV will be a decided value between the policyholder and the insurance company.

A car insurance policy can be bought from a dealer or agent or online. Online channel is one of the most preferred way to buy, as you can get your car insured instantly. The benefits include less paperwork required, convenience of comparing policies at a click, round-the-clock assistance from the online insurance broker or the insurance company, and the availability of online payment of premium.

Other factors which affect the premium are:

  • Age of the policyholder (age group 18-25 are more prone to accidents, hence higher premium)
  • Model of the car (SUV or Sedan. Generally, SUV have higher premium as compared to sedan)
  • Vehicle registration state
  • Fuel Type (Petrol or Diesel or CNG)

Premium can be calculated online with the help of car insurance premium calculator. It is an online feature which calculates your premium after taking into account the details of car and details of person opting for policy.

For both new cars as well as used cars, car insurance premium can be calculated using the car insurance premium feature online.

For the purpose of calculating premium for new car, one should provide details like the car registration number, model of the car, manufacture year, etc. with personal information like name, age and other details.

In case of used cars, details about the vehicle, age of the vehicle, existing insurance policy, no claim bonus, along with personal details should be provided.

Calculating premium online enables you to get the best premium quotes from various companies at click. It is time saving and convenient as you can get premium quotes instantly after providing the required information.

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