The base premium calculation for your car insurance depends on the following factors:
i. Insured’s Declared Value (IDV)- IDV is calculated on the basis of the manufacturer’s listed selling price of the vehicle after deducting the depreciation for every year as per the schedule provided by the Indian Motor Tariff. So in case of a new car, IDV will simply be its ex-showroom price while in case of an existing car for which you are renewing insurance, the IDV will be its ex-showroom price less depreciation as applicable to the age of the car. IDV is the maximum that the insurance company will pay in case of a complete loss of or damage to the vehicle. IDV is used only in the calculation of your premium for a comprehensive cover. In case of only a Third Party Insurance cover, IDV is not a determinant of your premium since the liability being covered is not associated with your car but damages to the third party or his/her vehicle.
ii. Geographical zone – India has been divided into 2 zones depending upon the location of the office of registration of the vehicle concerned:
• Zone A: Ahmadabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi and Pune.
• Zone B: Rest of India
Premiums for your comprehensive car insurance also depend and vary by the zone in which your car is registered. Zone A cities have a higher premium as compared to Zone B
iii. The cubic capacity (cc) of the engine – Each car differs in respect of its engine size which is measured by its cubic capacity. The size of the engine is the only determinant for a Third Party Insurance cover. Premiums are higher for cars with higher engine sizes or cubic capacity. The classification for engines is done on the following basis:
• Not exceeding 1000 cc
• Exceeding 1000 cc but not exceeding 1500 cc
• Exceeding 1500 cc
iv. Age of vehicle- How old your car is also has an impact on your car insurance premium. With age, the depreciation factor being applied to determine the value of your car or its IDV increases. This results in the insurance cover amount reducing with age, thereby reducing the premium associated with your car insurance. In most cases, value of cars that are less than 5 years old are determined by applying standard depreciation rates as per the Indian Motor Tariff. For cars that are more than 5 years old, the insurance company will arrive at a value for your car taking into consideration not only the depreciation schedule but also the actual condition of your car.
These factors determine the base premium associated with your car insurance policy. You may choose to buy additional optional covers or avail of available discounts to arrive at your final car insurance premium.