In recent times, due to the COVID-19 lockdown situation, financial instability is a story that most households are facing. This has eventually led to the careful planning of expenses. The most thought over expense during this lockdown is the car insurance premium as mostly our car is off-road. Here are a few ways how you can save that extra bit by effectively calculating your car insurance premium.
When financial concerns are at its peak, everyone would wish to save money as much as possible and most of them nowadays are planning to save maximum with car insurance. According to the Motor Vehicle Act, it is mandatory to have a third-party car insurance policy. So, before buying a new car insurance plan or renewing your existing plan, know the ways how to calculate your car insurance as per your budget. You can either calculate your insurance manually with the formula, considering the different factors, or use a car insurance calculator to calculate the insurance premium.
How to Calculate Car Insurance Premium?
Premium = OD (Own Damage) Premium – (No claim bonus + Discounts) + Liability Premium (fixed by the IRDA).
Variables that affect Car Insurance Premium Calculation
There are a lot of pointers that are mentioned in the fine print of the policy papers. But, before finalising the car insurance plan, the insurance providers give the exact premium to be paid against the insurance plan. Few factors other than the price of the car that affects the premium of car insurance.
Age and gender of car driver- With lesser age, the insurance companies find individuals to be more prone to risks. Higher the risk factor higher would be the car insurance premium.
Car model and variant – An expensive car would have a higher insurance premium for obvious reasons. Likewise, a car with a higher variant would attract more interest as the car of the lower variant of the same brand.
Fuel type – A CNG fitted car has a higher premium as compared to a Petrol/diesel car.
There are other factors that, when chosen wisely, could help you save your premium. Such as:
Anti-theft devices: If your car has ARAI approved anti-theft device you can get a discount of up to 2.5% on the premium (the discount percentage varies from insurer to insurer).
No Claim Bonus: You can get a No claim bonus if you have not claimed your insurance during the year. No claim bonus allows you to get a discount on your premium amount. You can also transfer your No Claim bonus to a different car or policy.
Voluntary Access- Voluntary access is the amount that you voluntarily accept to bear during the claim. Higher the amount you choose to bear lower will be your premium amount. In such times when you are at home mostly, you can opt for a higher deductible to decrease your premium amount.
Manufacturing year– If you have an old car, the IDV value of your car will be less. If the IDV value is less, you will have to pay a lesser premium. So, before you finalise your IDV value, consider the age of your car.
Calculating your premium with a car insurance calculator would also give you an idea of the amount you would have to pay for your car insurance. A car insurance calculator also helps you to compare the premium quotes offered by different insurance providers so that you can choose the best one for your car. With the help of the specification, you can compare the different insurance plans which can help you save on your premium amount.