Your Car's Color Doesn't Determine Its Premium. These 4 Things Do
Securing a car with the right insurance policy is a necessity. If you are a car owner, the coverage amountof your 4 wheeler insurance policy and other policy benefits will depend upon your car’s model.Also, the recent changes in the Motor Vehicle’s Act 2019 have made it essentialfor you to invest in a long term 4 wheeler insurance plan. Therefore, you need to stop and spend some time in purchasing the best insurance coverage for your precious car.
A common myth many car owners have is that the colour of their car affects the cost of their 4wheeler insurance. You might have heard people saying that a red car’s insurance policy is costlier because most of the racing cars whose insurance policy is expensive are red as well.
Although all insurance companies consider several factors while determining4 wheeler insurance premiums, the car’s colour is not one of them. If you are planning to buy a new car this year, it is crucial for you to know about the factors that affect 4 wheeler insurance premium.
Factors That Define Car Insurance Premium
1. Type of Insurance Policy
There are two types of 4 wheeler insurance policies – third-party and comprehensive. A third-party insurance policy offers coverage against third-party liabilities that may arise in case of accidents. In India, it is mandatory by law to buy this policy. On the other hand, comprehensive car insurance provides own damage cover along with third-party insurance benefits. It is up to you to decide if you want to buy this type of policy.
Since a comprehensive policy offers extensive coverage, it is costlier than a third-party plan. Depending on your choice of the plan, you will have to pay the 4 wheeler insurance premium. You should also know that only buying third-party insurance won’t give you any benefit in case your vehicle gets damaged.
2. Car’s Age
A car’s monetary value decreases as the vehicle ages. It is one reason why you can buy a used car at a lower rate as compared to the new one. In the insurance terms, the reduction in car value is known as depreciation, which also determines the insurance premium. It is why the cost of buying 4 wheeler insurance for a new car is higher than the old one.
3. Insured Declared Value (IDV)
Your car’s IDV plays a critical role in providing you with the maximum insurance benefit in case of theft or total loss of the vehicle. It is the market value that the 4wheeler insurance company will consider while processing your application. The premium you pay for the insurance is directly related to IDV.
4. Chosen Deductible
The insurance deductible is the amount you agree to pay in a claim before the insurer kicks in to offer the coverage. Along with the compulsory deductible, you can also choose a voluntary deductible, which will reduce the cost of 4 wheeler insurance. Consider it with an example –
You bought a car insurance policy with the compulsory 10% deductible. If the total claim amount in case of an accident turned out to be Rs. 50,000, it means that you will have to pay Rs. 5,000 as the deductible. However, if you voluntarily chose a 20% deductible, it means you will have to pay Rs. 10,000. Considering that you agree to pay for a higher deductible, the insurer will reduce the cost of 4 wheeler insurance accordingly.
It is essential to know how the 4 wheeler insurance premium is calculated. But it would be best if you consider the right factors that determine the policy premium, not myths. Also, make sure you buy the policy from a renowned insurer like Tata AIG, known amongst its consumers for seamless claim settlement. User reviews for Tata AIG car insurance policies confirm their market reputation. If budget is a constraint, you need to think of ways to lower down the 4 wheeler insurance premium and buy the policy.