Factors Impacting Car Insurance Premiums
Dec 2, 2021

Parameters That Influence Car Insurance Premiums for SUVs & Sedans

Buying a new car is always an exciting experience, be it your first or umpteenth. The thorough research to find a suitable car, taking test-drives and then finally boiling down to one from the many shortlisted. However, car buyers often ponder on one question when it comes to picking a type of car, whether to buy a new-age in-trend SUV or stick to classic old sedan style. While both have its unique benefits, the final decision is based on your use and preference for type of ride. Either type of car you buy, car insurance is a mandatory requirement that you cannot overlook. Premium is the amount that is charged by the insurance company to offer coverage for damages. While it is not based on one factor, let’s look at the what are the different factors the impact the car insurance premium.

Geographic location of registration

All vehicles are required to be registered with a road transport office or RTO that make it legal to drive one. Depending on where your vehicle is registered, insurance premiums are determined. The whole of India is divided in two zones, Zone A comprising of metro cities whereas Zone B which includes rest of the country. The reason for such differential pricing is based on the risk that each zone faces considering its traffic conditions. For instance, metros are notorious for jam-packed traffic snarls thereby increasing the risk of damage to your car.

Insured declared value (IDV)

Car insurance premium is primarily dependent on the insured declared value of your car. Since IDV is the maximum amount that the insurance company pays in the event of total loss or damage to your car, it is a significant amount of risk that the insurer undertakes thereby impacting its premium. Since a higher IDV requires a higher compensation by the insurance company, it impacts the premium.

Engine capacity

The engine’s power output is denoted in cubic capacity also referred to as CC. It is the volume of chamber of the engine where the combustion process takes place. The larger the chamber, the higher is its cubic capacity thereby producing a higher power figures. Naturally a high output vehicle is prone to risk of accident thereby impacting the premium for it.

Type of insurance coverage

Depending on the type of insurance policy the premiums are based. There are two types of policies to choose from – a comprehensive plan or a third party car insurance. A third-party cover, also known as limited liability cover, is the bare minimum prescribed by the law wherein coverage is offered only for third-party injuries and damages to property. On the other hand, a comprehensive plan is that which includes own damage cover along with such third-party cover providing an all-round protection. In addition, comprehensive plans offer the facility to customise the policy using add-ons that are optional policy upgrades. Since a wider protection is available under comprehensive policies, the premium for them is higher as compared to a limited liability cover. These are some of the various factors that in tandem influence the premiums. Apart from the above, the policyholder’s personal factors like age and claim history also influence the prices. So, the next time you are confused in selecting an SUV or sedan, keep in consideration these factors that shall result in the overall insurance premiums increasing or decreasing. Remember insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.

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