When talking about car insurance, one of the first things that come to the owner’s mind are insurance premiums. Since, it is a constant expense that a car owner has to pay regularly; a cheap car insurance can be disastrous.
If you have been paying insurance from a long time, you might have noticed that premiums for cars like Jeep, Mercedes-Benz, Audi, BMW and Volvo are quite high, whereas the premium amount for cars like Honda, Skoda, Ford, Fiat, Volkswagen, Hyundai, Toyota, Nissan, Tata, Maruti Suzuki and Mahindra is comparatively low. What is the cause of this difference?
Though the insurance cover for a motor insurance policy might be the same for everyone but when it comes to buying it, the premium is set differently for each car owner. Auto insurance providers decide the premiums for a car insurance policy through careful calculations.
They use your personal information and company claim data, and thus insurance providers estimate your chances of filing a claim. The higher the risk your profile shows, higher the premium. There are some factors like your driving history which are more than obvious to decide the bracket your premium amount falls within, but there are other factors too.
Here are the factors that decide your premium amount:
- Location: The place where you stay can have a great impact on the premium of your insurance policy. If you live in a place where the traffic is lower, the premium will also be low but if you live in an urban area which has high traffic and busy road 24×7, the premium for your insurance policy will be high. The reason behind this is very simple, people who live in rural and semi-urban areas with low traffic have lesser chances of being in an accident in comparison to the people living in the cities.
- Personal Factors: Some insurance companies consider personal factors among the important factors to decide the premium rate. Women drivers are known to drive more safely than males, which makes them less accident prone, hence, they pay low premium than men. Age can also be among the important factors that decide the premium amount as insurance companies believe that people who are under 25 years of age have the habit of driving fast and recklessly than people between the ages of 50 to 65 years, thus people with higher age have low insurance premiums.
- Type of Engine: Cars come with different type of engines. Some cars are made with engines that have the capacity to reach speed limits that are 4 times higher than a normal car. On the other hand, there are cars that run on diesel fuel and have high IDV. Such cars have higher premiums compared to that of a normal car because they are more accident prone and their parts come at a high price.
If you want to buy a car insurance policy with lower premium, you have to make sure that you avoid falling in above-mentioned criterion of risk factors and that your profile boasts of a clean driving history. You can also resort to taking a policy without any riders to keep the premium low but it is highly recommended that you avoid doing so, because a policy without riders can expose you to many risks.
To better understand the workings of a car insurance policy or to avail financial planning assistance in the purchase of a vehicle, you may drop us a message at PL-India Motor Insurance and we shall revert at the soonest. Alternatively, do email us at insurance@plindia.com
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