How to Calculate Your Car Insurance Premium?

How to Calculate Your Car Insurance Premium

Cars are not just a useful mode of transportation but also a source of joy and feeling of achievement. However, after buying a car, its security becomes your responsibility, which is where buying car insurance turns out to be the ideal solution. While it is mandatory to purchase car insurance as per the Motor Vehicles Act of 1988, the upkeep of the insurance can be challenging. With the increasing daily costs, the insurance premium will add to your monthly or annual expenses.

Having motor insurance is necessary to prevent losses during unexpected events. However, there are ways with which you can save on insurance premiums. The most beneficial approach is to compare the different plans available. You can use a car insurance premium calculator to analyze each policy carefully.

Since car insurance plans differ from each other, here are some steps which will enable you to calculate insurance premium the right way:

  • Research and Choose an Insurance Company

There are various car insurance companies in the market, each offering different car insurance plans. That is why you should research and learn about each insurer. It would help if you check the insurer’s goodwill and claim settlement ratio. Also, the customer reviews online will help you get a better understanding of the insurance company.

Further, after visiting the insurance company’s website, you must know how the premium varies as per the following parameters:

  • Model type of your vehicle
  • Age of a car
  • Manufacturer details
  • Variant of the car
  • Select Third Party or Comprehensive Plan

After the selection of an insurance company, you will need to choose the right motor insurance plan. Usually, the insurers offer two types of plans – third party and comprehensive policies.

The third-party scheme provides coverage for any damage to third-party property or individual in unforeseen events. You must know that the Insurance Regulatory Authority of India issues the premium of the third-party insurance plan.

The comprehensive policy is widely known to include own damage cover along with third-party insurance protection. This scheme is beneficial in case of car damage due to natural disasters or man-made events like burglary or theft. The premium of comprehensive car insurance depends on various factors, such as car model, insurance plan tenure, and selected riders, if any.

  • Tenure

With the completion of the insurance plan tenure, you will need to renew the plan. You can either select a yearly plan or opt for multi-year insurance for the long term. While you will pay a higher premium for the multi-year insurance policy, you do not require renewing your policy annually.

Even if the rates of the insurance policy might increase every financial year, your premium will remain the same. Keep in mind that the selected tenure will influence the premium payable. So, you must evaluate the differences with the help of a car insurance premium calculator.

  • Add-ons/Riders

One of the questions to ponder upon while thinking about the dos and don’ts of buying car insurance is the decision to use add-ons or riders. Various plans offer different types of riders. They provide protection and services against a variety of situations like car break-down, waterlogging, and others. The selection of these riders must be based on your specific needs.

Evaluate Insurance Premium Before You Buy a Policy

The selection of a car insurance policy mentioned is a critical decision to safeguard your vehicle. Different insurers have diverse charges. You can utilize the car insurance premium calculators available on their websites and choose a suitable option.

Reputable companies like Tata AIG offer all-inclusive motor insurance policies. Their team will happily assist you if you face any issue in understanding how to use car insurance premium calculator. Select an insurance plan after carefully evaluating its premium.