As per the Vehicles Act, 1988, it is compulsory in India, to have Motor insurance for all vehicles with third party coverage. The Insurance Regulatory & Development Authority of India commonly called IRDAI has set up the third-party insurance premium rates for all cars. Third-party insurance will help you (policyholder) to get financial assistance from their motor insurer in case your vehicle meets with an accident. The IRDAI then looking at all these factors, declares the third-party premium rates for the next financial year.
The following factors play a major role in increasing or decreasing the premium of your car insurance:
History Claim:
A person who has been claiming at a regular interval or has done multiple claims in the past appears to be a driver. A risky driver is responsible to the insurer and is charged a higher insurance premium.
Third-Party Premium Rates:
Third-party cover is a part of every vehicle insurance policy. IRDAI decides the third-party premium price which is included in the motor insurance premium. So, with the increase in the third-party premium rate, your motor insurance premium will increase.
Insured Declared Value (IDV):
This is the liability of the online insurance companies, where they are responsible to pay in case of a total loss. The higher the Insured Declared Value, the higher the claim amount.
Type of Car:
The premium of a luxury car is more than that of a less costly car, as the spare parts of the former are expensive. You can know much about the policy using various websites. It is then suggested to buy car insurance online.
Age of the Car:
Brand new cars attract higher rates than older cars. The older cars suffer from depreciation over time and their value reduces every year.
Location of the Policyholder:
One who is living in an area that is prone to accidents, calamities, or other losses, suffers greater risk than an owner who lives in a safer place. Hence, motor insurance premiums will be higher in risky areas.
Driving Habits:
Some insurance policy companies check your past driving records before offering motor insurance. The driving records could help the insurer to understand your driving skills and how often you have broken the traffic rules. If you’re having a bad driving record, then you will be considered a risky driver. In this case, you will have to pay a higher motor insurance premium.
As mentioned above the insurance premiums depend on a variety of factors. As it is tough to do anything for the annual increase in third-party premiums, you can take necessary precautions to keep your comprehensive motor insurance premiums low. Thus, go for a safer side to save your vehicle for a longer run and save yourself from paying money.
