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How Your Car’s Fuel Type Impacts Your Insurance Premium

Karen Menezes Karen Menezes 08 November 2016

Yes, we told you that the Insured Declared Value is the primary deciding factor for your motor car insurance premium. `But did we ever say that THAT is the only factor to consider? Here is another factor that has an effect on and shapes the premium.

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So you have figured out how the Insured Declared Value (IDV) is calculated and to what large an extent it influences the annual insurance plan premium that you are meant to pay. You also have realized that the age of the car also has its own set of effects — in fact, the higher the age of the motor the lower is the annual insurance premium of that vehicle.

But there are also other factors that can shape the said auto premium. One of these aspects is the car’s age and the other is the fuel consumption type of the said vehicle.

To Diesel or to Petrol- That is Really the Question

This is the eternal question that plagues the minds of all car buyers, right up to the point of purchase—is petrol a better bet or do we go with a diesel car? The usual, albeit, the wrong conception held by most people is that diesel cars are easier on the pocket but if you hunger for power, nothing beats a petrol car.

If you have been objectively following the market, you know by now how diesel cars have become so much more advanced and powerful than ever before, attracting a larger cross section of buyers.

If diesel is your fuel of choice, do also consider which diesel car, how many kilometers you will clock on an average, and how many years do you plan to use it. But don’t forget Coverfox’s mantra, compare and choose the best option available to you.

Go after the Better Driving Experience

One way to do so is by taking a car out for a test drive to see if it suits your requirements. This is obviously better than just comparing engine specifications in theory. Driving the car/s may push a lesser considered option as the one of choice and may even make you change your mind.

Overall petrol cars have traditionally comprised the more turbo-charged, sophisticated and smoother choice. About engine responsiveness, both options are still at two separate ends of a spectrum. Both types may go from 0 to 60 kph but by their own, different methods.

The Money Saver Proposition—Another Deal Breaker

If the budget is a consideration, and let’s face it—it is at most times, study the fuel economy figures without losing sight of the bigger picture. Depreciation is one of the most significant costs in automobile ownership. This leads to car resale value being central to the choice, and thus ends up tipping the scales for petrol cars.

There are many more costs involved too.

  • Ex-showroom price difference: Right from the onset, diesel cars are dearer than petrol. They cost approximately over a lakh more than petrol, a substantial cost hike.
  • Loans: If you are looking at auto loans to finance the car purchase, petrol cars will win this round as well. If we assume the down payment is equal, the interest on diesel cars is always more than the competition.
  • Average Mileage Provided: It has been noticed that output regarding mileage, all other things being equal, is 15 km per liter for petrol cars. Diesel cars edge their competition out with a 20 km per liter output in this matter.
  • Fuel Cost: Earlier, petrol was noticeably more expensive than diesel, but the gap has been closing in over the years. Soon, it may even out completely.
  • Consumables: The bill for consumables about diesel cars is again longer as is the cost of car servicing. Spare parts and battery also need frequent maintenance and replacement.
  • Road Tax: Almost always without exception, state governments in India levy a heavier Road Tax on diesel cars. That is an additional fund outflow of up to 2 percent in certain cases.
  • Auto Insurance Premium: If you calculate carefully you will find the insurance premium higher on diesel cars as against the petrol cars. This may be because service providers allocate increased risk to diesel cars over the competition. With that, the Own Damage insurance premium in case of diesel cars also ends up being higher when compared to the other.

Even out the odd

If the diesel car you're considering is more than 20 percent dearer than its petrol variant, then the chances are that it will ultimately prove to be more expensive overall. That is unless you plan on keeping your car for more than five years.

If that is what you plan to do buying the diesel version makes ultimate good sense because over a period of say approximately three to four years you will have recovered all the initial costs of diesel car. At this juncture, you would actual start savings on fuel too. Remember that the bigger the car you tend to choose, the smaller the premium is charged for the diesel version. And the more miles you cover, it is more likely that diesel variant will start saving you some money.

Ultimately, the car is in your court

Your ideal car choice will depend on your individual state of affairs and inclination towards a particular fuel type. For instance, while you may prefer the manner that diesel delivers its sustained performance over a period; you may also take to the way the petrol variant offers more fuel economy.

The choice is yours; after all, to turn a phrase on its head, the car is in your court.

Karen Menezes
Written by Karen Menezes
An optimist at heart, Karen loves to see the world through a pair of rose-tinted glasses. An award-winning blogger, she loves to dream with her eyes open. Writing is not her passion, it’s an OCD! If at all she isn’t writing, you can find her shopping online or experimenting with DIY recipes. This lass currently works as a Content Writer at Coverfox.