Secure Your Car With The Super Car Insurance Plan!

Secure Your Car With The Super Car Insurance Plan!

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 How is your car insurance premium calculated?

Well it's about time that has changed, don't you think? Read on to learn the components of your car insurance premium, so you can save more, and get smarter along the way!

Car Insurance
Car Insurance


Click here to calculate car insurance premium in few steps.

How is your car insurance premium calculated?

There are many things in the fine print of our insurance policies – terms and conditions, exclusions, special cases… but the premium is always communicated to us in advance. Mostly, however, we only hear a number, never really understanding how that number was arrived at, or what was actually involved in the process of calculation.

Car insurance premium depends on the following factors:

Vehicle IDV (Declared Insured Value) Vehicle Type & Age Engine Cubic Capacity Geographical Area

3 aspects of car insurance premium

Your car insurance premium is the sum of the following 3 covers:

third party cover

In India, it is mandatory to have TPL cover if you have a car.

Third Party Liability (TPL) covers any damage caused by your insured vehicle to any person or property resulting in financial loss or loss of life to the said person.

But TPL does not cover the expenses incurred by you for any repairs, so it is always wise to opt for a policy that covers damages to your own vehicle as well.

The TPL premium depends on the capacity of the car and is issued by the Insurance Regulatory Authority of India (IRDAI).

Own loss (OD) cover

OD cover is optional but highly beneficial. It reimburses your expenses in case your car is damaged due to natural events like earthquake, fire, storm etc. or any accident. The deal is - the higher the insurance declared value or IDV, the higher the premium and vice versa. Thus, as your car gets older, the IDV decreases.

The premium for the OD cover is calculated as a percentage of the IDV as decided by the Motor Tariff of India.

The formula to calculate IDV is:

IDV = Showroom Value of your car + Cost of Accessories (if any) - As per Depreciation Value (IRDAI)

Thus, the formula to calculate OD premium amount is:

Own loss premium = IDV x [Premium rate (fixed by the insurer)] + [Add-ons (eg bonus coverage)] - [Discounts and benefits (no claim bonus, theft waiver, etc.)]

personal accident cover

This component of your car insurance premium goes beyond your car, and protects you not only from accidents, but also from accidents that lead to disability. This is an important part of being comprehensively protected, as the likelihood of disability is greater than almost any other outcome. In 2014, around 3 lakh people were killed in road accidents. But 5 lakh were either seriously injured or permanently disabled. You can also increase the sum insured to cover unknown passengers in the policy.

As your sum insured increases, the premium for this cover gets higher.

other riders

And finally, you have the riders. These riders, or car insurance add-ons, provide you with a variety of protection and services at a nominal cost. For example, Engine Secure protects against waterlogging damage, Road Side Assistance will send help if your car breaks down in the middle of the road, NCB Protection lets you make two claims without losing your No Claim Bonus, and а lot. Each rider helps to make your car insurance policy more robust to ensure that you are protected in all situations.

Author :Tata AIG Team Published 

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