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How to Calculate Car Insurance Premium?

While most people buy car insurance policy solely on the basis of the premium amount, it is not usually the wisest thing to do. A cheap premium will give you a half-baked cover, and might also leave you with a huge hole in your pocket! The trick is to know the premium that will get you the most optimum cover.

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Factors to Calculate Car Insurance Premium

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Car Model and Make

Higher end cars are insured at a higher premium than lower end cars. The same goes for SUVs and MUVs!

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Year of Manufacture

The Insured Declared Value (or IDV) is usually lower for older cars, which can greatly reduce the premium.

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Type of Fuel

A car fitted with a CNG system/kit, will have a higher premium as compared to a petrol or diesel operating car.

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Age of Driver

With the common perception that younger drivers are less reliable, young adult drivers would have to shell out a higher premium.

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Cars registered in urban areas attract higher premium than the one in rural areas, particularly because of density of traffic in certain zones.

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Professionals such as doctors, defense personnel, and government employees might even get further discounts in their premium.

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Anti-theft discount

Installing anti-theft devices approved by ARAI can get you an additional 2.5 percent discount on your car insurance premium amount.

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Voluntary deductible

It is the minimum amount declared by you to be borne at the time of claim. A higher deductible can greatly reduce your premium, but it must be used cautiously.

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No Claim Bonus

This is a discount offered to you for every claim-free year, varying from 20 percent to 50 percent depending on the track record of your claims.

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Details Required to Calculate Car Insurance Premium

In order to calculate your exact car insurance premium online, you need to provide specific details about your car, whether new or old.

What sort of details do these include?

  • Car details and manufacturer
  • Date and State of registration
  • Policy start date
  • Vehicle make and model
  • Year of manufacture
  • Type of vehicle

In the case of a used car, you would also need:

  • Current car insurance policy details
  • Previous car ownership details
  • Previous year claim history reports

Since the premium calculator gets you the best deal based on your requirements, it is best to be completely accurate during the calculation process!

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Don't Just Calculate Your Car Insurance Premium, Do It Smartly.

Watch this video on the smart ways to reduce your car insurance premium.

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Why is It Important to Calculate Premium?

It only makes sense to do your homework before buying something as crucial as insurance online. What are the benefits of the same? Here are a few:

  • You become well-informed about the market and all its players.
  • It makes the overall process simple and convenient.
  • You can be already prepared with all the prerequisite documents.
  • You get a macro view of all the plans at a quick glance.
  • You can compare rates and features to get the best of deals!
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You don’t have to be a Mathematician to calculate your car insurance premium. Get insurance premium quotes customized to suit your car’s needs with Coverfox.com.

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Frequently Asked Questions

What is NCB?

No-Claim Bonus (NCB) is the discount on own-damage portion of the premium that is rewarded to you by your insurer at the time of renewal in case you haven’t made a claim on your car in the previous year. It be accumulated up to a maximum limit of 50% for private cars. The table below simplifies how NCB is earned:

Details Discount
No claims made in preceding 1 year of insurance 20%
No claims made in preceding 2 yrs of insurance 25%
No claims made in preceding 3 yrs of insurance 35%
No claims made in preceding 4 yrs of insurance 45%
No claims made in preceding 5 yrs of insurance 50%

Is my No-Claim Bonus transferrable?

No claims bonus is the reward that the driver gets for his/her fabulous driving skills. So, even if you buy another can, the NCB can usually be transferred to that car, but if you choose to switch your insurer before the year ends, you won’t be eligible to receive NCB for that year.

Some insurers may provide your proof of NCB in the car insurance renewal letter that they send to you. If it's not there, do make sure you call up your insurer and ask them to send it as it is very important.

If you cancel your policy, you have two years to reuse your NCB. Or else it would expire and you would have to start from scratch

Why is it important to know our third-party premium?

The third party cover provides you legal liability for the losses you cause a third party by way injury, death, or property damage, in the event of an accident. Third-party liability cover is mandatory as per the Motor Vehicles Act, 1988.

The premium is initiated based on the cubic capacity of the engine –

  • Less than 1000 cc
  • 1000 cc to 1500 cc
  • More than 1500 cc

The IRDA (Insurance Regulatory and Development Authority of India) revises third-party rates each year. This changes your third-party liability portion of the premium.

In a comprehensive car insurance plan, which offers both own-damage and third-party cover, while using the car insurance premium calculator to calculate your premium, you would notice that the revised rates of third-party portion of the premium each year will bring a change in your overall premium.

If my premiums are going to increase with add-on covers, does it make sense to still buy add-on covers?

The add-on covers are meant to support car insurance plans adequately to provide you with optimal coverage.

For example, a zero depreciation cover ensures that you can have a full claim on the value of the car without considering deductions for standard depreciation on parts that are replaced after an accident.

In this way, you don’t have to worry about paying way too much as most add-on covers are quite affordable. Also, the price of add-ons depend on several factors such as age and type of the vehicle, location, etc.

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Car Insurance Premium Calculator