As they say, nothing is free and everything has a price! Likewise, all auto insurance has a cost: a premium. However, the auto insurance premium for a used car would be different. Let’s highlight the factors that affect your used car insurance.
It’s easy to argue about buying car insurance. As we know, car insurance is not only mandatory under Indian law, but it also saves in times of crisis. It not only protects your car from accidental damage or disaster but also has a protective cover for the driver. No calculation of the used car insurance premium is the same as each case has different criteria and conditions. Let’s take a look at the factors that make the premium payable for a used vehicle vary from case to case.
IDV is the current market value of your vehicle. IDV refers to the highest amount the insurer pays for car insurance. Therefore, it is the maximum amount that you can claim in the event of a total loss of your vehicle, theft or irreparable damage during the period covered by the policy. For example, if you buy a new Maruti Swift car for Rs. 6 lakhs. Over the years, the market value of the car will depreciate. Let’s say that after a few years the market value of the Swift falls by Rs. 2 lakh and when you renew your used car insurance the IDV drops to Rs. 4 lakh. This Rs. 4 lakh is the maximum amount that the insurance company will reimburse you in the event of a claim during the contract period. When you buy car insurance online, you have the option of choosing your car’s IDV. The higher the IDV, the higher the insurance premium to pay, and the older the car, the lower the insurance premium to pay.
Variation in premiums is also dependent on auto insurance coverage and benefits. Comprehensive insurance offers comprehensive insurance coverage and more services than liability insurance. Liability insurance does not cover your own vehicle in the event of an accident. With better coverage, comprehensive auto insurance is more expensive than third-party auto insurance.
Location plays an important role in choosing your auto insurance premium. If your location has a lot of theft or natural disaster claims, your insurance premium will suffer. Since the density of traffic is higher in large cities, they are prone to accidents and therefore attract higher premiums.
The no-claim premium is the insurance company’s incentive not to file a claim within one year. It is accumulated for consecutive years without rights. If you file a claim, you will lose in the NCB and pay a higher premium for the next year. If you do not file a claim, you will be entitled to an unclaimed premium for the next year and your insurance premium may be lower than the previous year.
Just as the car’s engine is an important factor, the fuel used in the car is also an important factor in choosing the insurance premium. Compared to gasoline/diesel, you may have to pay a higher premium for installing a CNG cylinder in your car.
Vehicles are used for personal or business purposes. The commercial use of the vehicle entails greater insurance since the wear and tear of the vehicle is greater. Therefore, the premium for personal and commercial vehicle insurance is different.
Additional coverage has an additional cost and can be added to the base policy to improve coverage. The more additional coverage you choose, the more expensive the premium will be. So if you have a very old car, you can decide accordingly whether certain supplemental insurance is worth the increased premium payable.
The manufacturer of your car is another characteristic that can determine your premium. Insurance companies decide the premium based on the loss ratio of the different brands. The class of your vehicle also plays an important role. A luxury SUV would have a higher premium than a hatchback or midsize sedan.
The safety team can help you get a discount or lower premium on used car insurance. For example, if you have an anti-theft system or a car lock, only a few insurers can offer your bonus concession. You need to make sure that the safety devices installed in your car are listed by the Automotive Research Association of India (ARAI).
The insurer offers a discount on its own damage based on the risk experience. Depending on the above factors, the used car insurance premium varies. When your insurance premium is calculated, you will better understand the reasons behind it. You can make changes according to your needs and get a better deal on used car insurance.