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Feb 25, 2023

Can Car Insurance Premium Change Over Time?

Everyone who buys four-wheeler wonders if car insurance premiums change with time. And the short answer to this question is yes, car insurance premiums change over time. That's exactly why the cost of your car insurance plan is different every year. To be precise, it is higher than the previous year. Now you might wonder, insurers claim that we get rewards for every claim-free year. Then why would the car insurance premium go up? Let's find an answer to this question.

Why do car insurance premiums increase with time?

Insurance policies are regulated by the Insurance Regulatory and Development Authority of India (IRDAI) in our country. Since third-party liability motor insurance is mandatory by law, it is especially controlled by them. This policy has been made mandatory under the Motor Vehicles Act of 1988, to ensure that no unprivileged victim of an accident goes untreated. You can visit the official website of IRDAI for further details. The Insurance Regulatory and Development Authority of India revises insurance premiums every year. Prices are changed based on factors like the number of claims made in the year and loss ratios for insurers. Check out the below table to understand the difference in third party car insurance premium rates for private cars between the financial years 2021-2022 and 2022-2023:
Type of car Premium rates during FY 2021-22 Premium rates during FY 2022-23
Less than 1000cc ₹2,072 ₹2,094
1000cc to 1500cc ₹3,221 ₹3,416
More than 1500cc ₹7,890 ₹7,897
Since the price of a third-party insurance plan has increased, the premium amount for comprehensive plans will also go up. However, there are multiple other factors that contribute to the hike in car insurance premiums.

Common reasons why insurers increase the car insurance premium

Here are a few reasons why insurers change their car insurance premiums every year:
  • Wider coverage

If you were buying a basic car insurance policy, i.e., third-party liability insurance for years, but suddenly switched to a comprehensive plan, your premium might have changed significantly. Since a comprehensive car insurance plan offers wider coverage, the insurer charges an extra premium for protecting you and your vehicle. Your insurance premium can be higher if you start adding add-on covers like roadside assistance cover, zero depreciation cover, engine protection cover, etc. The concept is simple, you have to pay for every additional service you wish to avail of. Now that doesn't mean you avoid getting a comprehensive car insurance plan. However, you must opt for only those add-on covers that are absolutely necessary. *
  • Car inspection

Your insurer will inspect your vehicle if you renew your policy after the plan has already expired. It is always better to renew your plan before it expires because the inspection process might increase your premium even if there is no issue with your car. The renewal process can be tedious. Visiting the branch office nearest to your home and waiting in line just to renew your plan can be daunting. However, have you considered renewing your car insurance online? Not only is it time efficient, but also convenient. You can renew your plans from the comfort of your home. *
  • Car modification

There are two types of car modifications: performance and aesthetic. For example, installing alloy wheels would be considered an aesthetic modification. However, enhancing your car’s engine is deemed a performance modification. Making any type of changes in your car for better looks or performance will increase your car's value which will therefore lead to an increase in the insurance premium. *
  • High-risk profile

According to insurance companies, anyone with a high-risk profile is tricky to deal with. Anyone who raises false claims or uses a car for illegal purposes is considered a high-risk profile. In fact, the car insurance premium is bound to go up for anyone with a history of making claims due to accidents. *
  • Different insurer

Changing your insurer can shoot up your insurance premium. However, with thorough research, you can also find an insurance provider that offers top-notch services at a feasible price. When on a hunt to switch your insurer, do not forget to go through online reviews and use the online car insurance premium calculator, so you do not end up paying more for the same plan. * * Standard T&C Apply Tip: Check car insurance online as insurers offer steal-worthy deals on their insurance covers.


Your car insurance premium is more likely to change every year. However, you can try to keep it to the low by following traffic rules and regulations to the T. Moreover, avoid raising claims for nominal expenses as it can lead to a higher insurance premium. Even though if the premium continues to rise, do not forget that you need insurance for cars. It allows you to drive your vehicle without being stressed.   Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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