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Policy Details, Premium Rates & Benefits of Car Insurance

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A valid Car Insurance is a mandatory requirement by law for the motor vehicles plying on Indian roads. There are basically two types of car insurance policies offered by general insurance companies in India. They are third party insurance and comprehensive car insurance.

Third party premium calculation

Third party car insurance gives you coverage against the damage and liabilities of the third party arising out of a collision. It is the most basic and cheapest form of car insurance policy available. The premium calculation of third-party liability depends on the basis of car engine capacity. The IRDA decides the rates for Third Party Liability and the latest rates are given in the below table.

Vehicle CC Fixed TP Premium in Rs
Less than 1000 CC 2055
More than 1000 cc but less than 1500 CC 2863
More than 1500 CC 7890

Comprehensive Insurance premium calculation

Comprehensive insurance covers for damages for the insured vehicle and also the liability of the third party arising from the accident.

The premium calculation of comprehensive car insurance is based on various factors, primary being Insured Declared Value (IDV) of the specific model. The IDV is calculated on the ex-showroom price of the car and it changes annually as per the depreciation rate of a certain model. Below is the depreciation pattern that has been set by IRDA

Car Age Depreciation percentage for calculating IDV
First 6 months 5%
Over 6 months but less than 1 year 15%
Over 1 year but less than 2 years 20%
Over 2 years  but less than 3 years 30%
Over 3 years but less than 4 years 40%
Over 4 years but less than 5 years 50%

The other factors of car insurance premium include:

No claim bonus which is rewarded to the insured for not making any claims during the policy term. No Claim Bonus (NCB) can be accumulated up to 50% of the car insurance premium.

Discount on car insurance can be availed if the car owner has installed an anti-theft device approved by ARAI (Automobile Research Association of India) or opts for a voluntary deductible.

Essential Car Insurance Tips

Compare car insurance online

Skim through insurance comparison websites like coverfox.com and compare the policies offered by various insurers. Choose the one that offers the best deal to suit your requirement.

Raise your deductible

Raise your deductible component in order to reduce car insurance premium. Elevate it to a fairly reasonable amount so that you don’t defy the purpose of getting an insurance.

Don’t pimp your ride

Some people are obsessed with their cars and like to modify it to large extents with jazzy wheel, amplified engine parts etc. Remember, these additions can cost you in the form of increased premiums.

Don’t claim for small damages to secure your no claim bonus

You are entitled to a No Claim bonus (NCB) only if you haven’t made a single claim that year. The NCB accumulates year on year. Thus, unless deemed necessary, you must avoid putting claims for really small issues and damages. Let the local mechanic take care of these trivial problems.

Transfer your Bonus

It is the person and not the car to which car insurance bonus is linked. You can transfer the accumulated bonus when getting an insurance policy for the new car. So, if you do sell your car and get a new one, remember to get your accrued bonus.

Don’t get carried away with coverage

Getting insurance is good but getting obsessed with unnecessary add-ons is not. Select the add-on that will add value or come in use to you depending on your requirements and area you reside. Add-on as you are aware come with a cost and will increase your car insurance premium. If you have an older car, compare the value of the car to the cost of optional collision or comprehensive coverage and decide if it’s worth it.

Renew on time

Make sure you renew your No Claim Bonus on time. In case you renew the car insurance after the lapse of the policy, you might end up losing your No Claim Bonus and will end up getting your car inspected. It is obvious that renewing a lapsed policy costs a premium that is higher than an ongoing, active one.

Install Anti-theft devices

It is beneficial to install safety features in your car. By purchasing gear lock, steering lock or an anti-theft alarm device, you can reduce your yearly premium. Also getting a membership with WIAA can help you avail special discounts.

Fast-Track Your Car Insurance

The car insurance providers today have a strong presence online, making it easier to buy a car insurance policy on the internet. Don’t rely on a pushy agent anymore. Instead, focus on the web and scan through some suitable, accessible and cheaper policies.

So, if your car insurance premiums are giving you a fright, then apply the above tips while getting a car insurance the next time and save your hard-earned money.

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