What factors affect the premium of my car insurance - Busting myths

Every responsible car owner must have an insurance policy. These plans provide crucial financial protection after accidents, theft, or damages, ensuring peace of mind. The Motor Vehicles Act of 1988 made third-party coverage mandatory for all vehicles on Indian roads. However, most car owners opt for comprehensive coverage for better financial protection. Before purchasing a policy, many people compare the premiums different companies offer. Unfortunately, there’s a lot of misinformation about what influences your vehicle insurance premiums. Let’s bust some common myths and help you separate fact from fiction.

We often hear statistics stating women are safer drivers than men and that they cause fewer accidents. In some countries, insurance companies may offer lower premiums for women drivers. In India, insurance companies evaluate the vehicle’s make and model, the policyholder’s driving history, and their geographical location. While your gender may not impact your premium, your driving behaviour can. Zuno has launched PHYD, a Pay How You Drive add-on that helps you save if you drive well. The add-on rewards good drivers with discounts on their car insurance premiums at renewal.

Yes, sports cars often attract higher premiums. However, it is not solely because they are sports cars. The premium is influenced by the car’s engine size, market value, and the likelihood of theft or involvement in accidents. Sports cars usually fall into insurance categories associated with higher risks, increasing the premium.

The age of the vehicle and the policyholder both impact the insurance premium. Older cars have lower market value, so insuring them becomes less risky. Usually, you will pay lower premiums for older vehicles than newer ones.

The policyholder’s age may impact the premium amount, but not directly. Young drivers, particularly those under 25, are often perceived as riskier due to less driving experience. However, older drivers with a history of accidents or claims can also face higher premiums. Ultimately, driving history and experience are key determinants.

The colour of your vehicle does not impact your insurance premium. Insurance companies do not consider colour a risk factor. Instead, they focus on the car’s make, model, age, and safety features.

Many people believe a low credit score can increase their car insurance premiums. However, insurance companies across India do not rely on credit scores to determine the premium amount. They focus on risk assessment factors such as the vehicle’s specifications, location and the driver’s accident history.

Some people believe their location does not impact their insurance premiums. Contrary to this belief, your location or PIN code can significantly affect your car insurance premium. Urban areas with higher traffic density and accident rates often attract higher premiums than rural areas. Additionally, regions prone to theft or natural disasters may also see higher insurance costs.

Most vehicle owners consider only the premium amount while buying a plan. Let’s explore how you can get maximum coverage while minimising your costs.

The first step to saving on your car insurance premium is to shop around. Different insurance companies offer varying rates and benefits. Use online comparison tools to evaluate offerings from multiple companies. Look beyond the premium. Consider the inclusions, exclusions, add-ons, and the claim settlement ratio. You can then find policies offering the required coverage at the best price.

A deductible is the amount you pay out of pocket before the insurance kicks in. When you choose a higher deductible, you agree to pay a larger share of the initial costs while filing a claim. Insurance companies will offer premium concessions when you increase your deductible. However, ensure you select a deductible amount that you can afford comfortably.

Installing anti-theft devices in your car can reduce the risk of theft, making your vehicle safer in the eyes of the insurer. Devices like steering locks, gear locks, and GPS tracking systems can qualify you for discounts on your premium. Ensure the devices are approved by the Automotive Research Association of India (ARAI) for the discount to apply.

The No Claim Bonus refers to a reward the insurance company offers when you do not make any claims during the policy term. The NCB can significantly reduce your premium at renewal. Even if you switch insurance companies, you can retain your NCB. Avoid filing small claims to preserve your NCB.

Add-ons enhance your coverage and increase your premium. Assess your needs carefully and opt only for essential add-ons. Popular add-ons like zero depreciation, engine protector, and roadside assistance are beneficial. However, if some add-ons don’t align with your requirements, avoid getting them with your policy.

Understanding the factors impacting your car insurance premium can help you navigate the insurance landscape more effectively. Your driving history, vehicle type, and location help determine your insurance premium. However, you can use these handy tips to maximise coverage while lowering your premium. At Zuno, we offer comprehensive coverage plans and a range of add-ons to ensure you get adequate coverage without paying high premiums. Visit the Zuno website today to get adequate car coverage and enjoy care-free drives every time.

ARN: Zuno/Blog/What factors affect the premium of my car insurance/08/24/04. All rights reserved.