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Why Car Insurance Premiums Change As Per Geographical Regions
Mar 10, 2024

Understanding Why Car Insurance Premiums Change As Per Geographical Regions

Car insurance premiums can vary significantly based on geographical regions. If you've ever moved to a new place, you might have noticed a change in the cost of your insurance policy. The factors influencing these variations are diverse, ranging from local traffic patterns to the likelihood of natural disasters. Let’s get into the nuances of why the insurance premiums change as per geographical regions.

Insurance Zones In India

There are two zones: Zone A and B. Your car’s policy premium is decided on the basis of which zone you live in. Zone A consists of metros such as Mumbai, New Delhi, Chennai, and Hyderabad. Zone B consists of the rest of India.

How Is Insurance Premium Calculated For These Zones?

The following tables show the premium in both zones. Based on the zone you are present in, the respective premium will be apply to you. Other factors such as the age of the vehicle, engine type and its cubic capacity, also decide the premium:
Zone A#
Car’s age   For engines less than 1,000cc Engines between 1000 - 1,500cc Engines 1,500cc and above
Up to 5 years 3.127% of IDV 3.283% of IDV 3.440% of IDV
Between 5 to 10 years 3.283% of IDV 3.447% of IDV 3.612% of IDV
10 years and beyond 3.362% of IDV 3.529% of IDV 3.698% of IDV
Zone B#
Car’s age For engines less than 1,000cc Engines between 1000 - 1,500cc Engines 1,500cc and above
Up to 5 years 3.039% of IDV 3.191% of IDV 3.343% of IDV
Between 5 to 10 years 3.191% of IDV 3.351% of IDV 3.510% of IDV
10 years and beyond 3.267% of IDV 3.430% of IDV 3.596% of IDV
The above tables may help you understand how the premium varies as per the zone. While checking for policy quotes with the help of a car insurance premium calculator, these same factors are taken into consideration.

Geographical Factors Affecting Car Insurance Premiums

The following aspects may have an impact on your third-party or comprehensive car insurance premium:

Traffic Density and Accident Rates

One of the primary factors impacting car insurance premiums is the level of traffic density in a particular area. Urban centres with high population densities often experience more traffic congestion, leading to an increased risk of accidents. Consequently, insurance companies adjust their premiums to reflect the possible likelihood of higher claims in these regions.*
Accident rates are closely tied to traffic density, and insurers meticulously analyse historical data to determine the frequency of accidents in specific areas. Higher accident rates mean a greater probability of claims, prompting insurance providers to raise premiums to cover the increased risk.*

Crime Rates and Theft

Geographical regions with higher crime rates, especially vehicular theft, often witness elevated insurance premiums. If an area has a reputation for car theft or vandalism, insurers adjust their rates accordingly. This is because the risk of a stolen or vandalised vehicle is higher in locations with a history of criminal activities.*
Insurance companies consider the local crime statistics when assessing the risk associated with providing coverage in a particular area. Urban areas or neighbourhoods with a higher incidence of auto-related crimes may experience inflated insurance premiums as compared to safer, suburban counterparts.*

Weather and Natural Disasters

The weather conditions prevalent in a geographical region play a pivotal role in determining car insurance premiums. Areas prone to severe natural calamities, such as floods, earthquakes, tornadoes, or cyclones increase the risk of vehicle damage. Insurance companies factor in the likelihood of weather-related claims when setting premiums for these regions.*
For instance, if you live in a coastal area susceptible to flooding or cyclones, your car insurance premium may include a higher rate to account for potential damages caused by due to the calamity.*

Road Infrastructure and Conditions

The state of the road infrastructure can impact car insurance premiums. Areas with poorly maintained roads or a higher likelihood of potholes and other road hazards may experience increased claims due to vehicle damage. Insurers consider the road conditions when calculating the risk associated with providing coverage in a particular region.*
Urban areas with heavy traffic often undergo frequent road repairs and maintenance, leading to increased risks for drivers. In turn, insurance premiums may be adjusted to accommodate the potential for accidents and vehicle damage caused by road conditions.*

Population Density and Demographics

The population density and demographics of a region contribute significantly to car insurance premium variations. Urban areas with high population densities often have more vehicles on the road, leading to increased risks of accidents and collisions. Additionally, densely populated regions may have a higher frequency of insurance claims due to a greater number of vehicles sharing the same space.*
Demographic factors, such as the age and gender distribution of drivers in a particular area, can also impact insurance premiums. If an area has a higher concentration of younger drivers or a demographic profile associated with higher accident rates, insurers may adjust premiums accordingly.*


Insurance premiums for your car are dynamic and can vary significantly based on geographical regions. Understanding the factors influencing it can offer you an in-depth understanding of things and help you make an informed decision when selecting coverage. If you already have an existing policy, such as third party car insurance , renewal carried out on a timely basis can be beneficial for you and your vehicle.*
*Standard T&C Apply
#Visit the official website of IRDAI for further details
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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