The Complete Guide On How To Calculate Your Insurance Cost

When you buy a car, you are also required to buy an insurance policy for it. Now, a car is a big investment, and you're often fixated on the exact amount that you'll have to pay for the car, only to be told that you also need insurance. This extra amount that you didn't factor in to your total cost outlay, is suddenly viewed through the prism of unwantedness.

That is why it's best to familiarise yourself with the rule that if you buy a car, you need insurance with it. And that is the total cost of buying a car. Why do you need insurance? It is your financial safety net for when an accident occurs. You minimise your out-of-pocket expenses for these unexpected occurrences, allowing your financial health to remain intact. Furthermore, it is mandatory by law to have a car or bike insurance when you purchase a vehicle.

How is the Insurance Premium Calculated?

The premium calculation of your motor insurance policy is dependent on:

Age of Vehicle

Newer vehicles are more expensive to insure, simply because they have a higher value than their older counterparts. Cras and bikes are depreciative in nature, and will lose value over time. This can be due to scratches, bumps, rust, scrapes, etc., and the degradation in the mechanical quality of the components over time.

Location

The location of your vehicle registration is another major factor influencing the premium cost. Major cities such as Delhi, Mumbai, Kolkata, Chennai, Bangalore, Ahmedabad, and Hyderabad, attract a higher premium cost due to higher probability of accidents. The rest of India is charged at a lower rate, given the lower probability of accidents. Which is why if you change your location of residence, it's important to get your vehicle registered under the local RTO, and update your policy accordingly.

Vehicle Make and Model

The make and model of your vehicle also affects your motor insurance rate. The more expensive your vehicle, the higher the premium. That's simply because of the cost of parts, which would be higher for more expensive vehicles, and their availability.

Driver's Gender and Age

Younger drivers tend to attract a higher premium rate due to their inexperience on the road. Young men are also charged more than young women as they more likely to get into accidents, leading to insurance claims.

Type of Engine

Diesel cars are more expensive than their petrol counterparts, and have a more complex power unit. Their components are also harder and more expensive to service, which is why diesel cars attract a higher premium than petrol cars.

Engine Capacity

Higher the engine capacity, higher is the premium. But this is a factor that only comes in to play when we talk about third-party motor insurance.

What Are the Types of Motor Insurance Policies?

There are two types of motor insurance policies:

• Third-Party Liability Motor Insurance

This is a policy that covers against financial liabilities arising out of damage to a third-party individual or property as a result of an accident. In theory, if you're the victim of the accident, you can claim damages from the perpetrator's third-party insurance, and vice versa.

• Comprehensive Motor Insurance Policy

This includes the mandatory third-party coverage, and own damage as well. Which means you're covered against vehicular damage and injury to yourself, in case of an accident, regardless of the person at fault. This is almost always the recommended option.

How Do I Buy A Policy?

Simply visit the insurer of your choice. Compare the policies available, and enter your details such as the car registration number, age, claims history, vehicle make and model, and year of purchase, in the insurer's premium calculator, and receive an instant quote.

Furnish the details, and make the payment, and you're covered!