How To Calculate Car Insurance Premium

Though one can manually find out the premium by a simple formula, calculating the car insurance policy gets easier with the help of the car insurance calculator.

How is car insurance premium calculated?

A car insurance premium calculator can be used to calculate the car insurance premium. It gives the quote for the car insurance amount and the premium that needs to be paid for the car insurance.

The car insurance calculator would require few details like – Name of the Manufacturer, Model number of the car, year of manufacturing, registration date, fuel type, or car sub-type if any. 

You also may have the option of selecting the accessories that you wish to get insured.

The Formula For Calculating Car Insurance Policy

Premium = Own Damage Premium – (No claim Bonus + Discounts) + Liability Premium (as fixed by the IRDAI) + Add-on costs

What are the factors responsible for calculating car insurance premium?

Some components influence the premium of a car insurance policy. The insurance holder considers these factors for evaluating the premium amount.

Insured Declared Value (IDV) of the car

Every car, whether old or new, has a value, which is decided based on IDV.

As IDV is the maximum amount that you claim for the loss of your vehicle, it is a crucial factor for deciding the premium of the car.

No Claim Bonus

The no claim bonus in car insurance is given to the policyholder who hasn’t made any claim for the previous year. It is a reward that is given to the riders who drive responsibly. With a no-claim bonus one can save up to 50% on the own damage premium.

Discounts

Some discounts are available on own damage premium. It affects the amount of premium paid.

  • Installing any device that can protect your car from theft such as an alarm
  • Discount is offered to those who have membership from the Automobile Association of India (AAI)
  • You can get a lower premium if you opt for voluntary deductibles

Loadings

Any appliances that are fitted in the car and not included in the manufacturer’s selling price need an additional amount for insurance such as CNG or LPG units, CD/DVD players.

Age and gender of the Car owner

The age and gender of the car driver also affect the premium on insurance. Drivers aged 25 or less are considered as risky drivers as they are more prone to accidents. The insurance premium for this age group is comparatively high.

Model and make of the car

High end branded cars are insured at a higher cost and also have a higher premium as compared to other low end vehicles. Similarly, hatchbacks have a low insurance premium as compared to SUVs.

Geographical location

You will have to pay a higher sum to get your car insured if you live in an urban area as it has a high density of traffic, thefts, and robberies.

Fuel Type

A CNG fitted car attracts more insurance than diesel or a petrol car of the same model. Also, a diesel car has a higher premium than a petrol car as the premium is directly proportional to the price of the car.

What are the benefits of using Car insurance Premium Calculator?

  • Using a car insurance premium calculator helps to compare the premium policies online, it is also a hassle-free and paperless process.
  • With an insurance calculator, you can easily select your plan without being influenced by any insurance agent.
  • You can change your variables in the online calculator to know the premium that you would have to pay for a specific insurance amount

It is wise to use a premium insurance calculator online to know the exact payable premium against your car insurance. Also, the factors above should be considered before calculating the premium of the car.