Car Insurance Premium Differs Across Different Regions Of India

After buying a new car, you bought a comprehensive car insurance plan and have been staying financially protected by paying premium every year. But, did you ever think what factors impact the calculation of car insurance premium? Read on to unveil the secret.

How premium is calculated for car insurance plans in India?

Some typical parameters determining the premium of a car insurance in India are;

  • Age

  • Fuel type (petrol or diesel or LPG)

  • Cubic capacity

  • Car type (private or commercial)

  • IDV (This is the maximum sum insured that you can claim on your car insurance plan)

City of registration helps decide premium amount

Aside from these usual factors, the zone where the car is registered also plays an instrumental role in working out the premium of motor insurance plans. Particularly, criteria like the cubic capacity and the age trigger varied premium of the same car in different zones. In India, there are two such zones. Zone A includes 8 major cities in India and the rest of India comes under zone B. Zone A cities like Chennai, Mumbai, Hyderabad, Bangalore, Kolkata, New Delhi, Ahmedabad and Pune are considered as locations with higher risks due to higher population density, heavier traffic and higher vehicle density that lead to higher probability of accidents. The incident of car theft is also higher in these cities. So, if your car is registered in Zone A cities you have to pay higher premiums for your car insurance cover.

Similar to different zones, the premium of the car insurance plans also affected by different slabs of key parameters like cubic capacity and age of the car. Both these factors come with three different slabs. For the age, three slabs are – below 5 years, 5 to 10 years, and over 10 years. And for the cubic capacity, three blocks are less than 1000 cc, between 1000 cc and 1500 cc and more than 1500 cc.

Current car insurance premium rate in two zones in terms of cubic capacity and age

Zone A

The premium rate of car insurance plans in zone A cities differ on the basis of the age and cubic capacity of a specific car. Let’s keep different age-bands as constant to see how varied cubic capacity affects the premium.

When age of the car is less than 5 years

  • Premium rate when cubic capacity is less than 1000cc is 3.127% of the IDV of the car

  • Premium rate when cubic capacity is between 1000cc and 1500cc is 3.283% of the IDV of the car

  • Premium rate when cubic capacity is more than 1500cc is 3.440% of the IDV of the car

When age of the car is between 5 and 10 years

  • Premium rate when cubic capacity is less than 1000cc is 3.283% of the IDV of the car

  • Premium rate when cubic capacity is between 1000cc and 1500cc is 3.447% of the IDV of the car

  • Premium rate when cubic capacity is more than 1500cc is 3.612% of the IDV of the car

Centre Banner

When age of the car is more than 10 years

  • Premium rate when cubic capacity is less than 1000cc is 3.362% of the IDV of the car

  • Premium rate when cubic capacity is between 1000cc and 1500cc is 3.529% of the IDV of the car

  • Premium rate when cubic capacity is more than 1500cc is 3.698% of the IDV of the car

Zone B

The premium of the car insurance plans in zone B area would be less compared to Zone A cities. Let’s figure out the premium rate in the entire zone B area following the same methodology of determining the premium of motor insurance plans in Zone A cities.

When age of the car is less than 5 years

  • Premium rate when cubic capacity is less than 1000cc is 3.039% of the IDV of the car

  • Premium rate when cubic capacity is between 1000cc and 1500cc is 3.191% of the IDV of the car

  • Premium rate when cubic capacity is more than 1500cc is 3.343% of the IDV of the car

When age of the car is between 5 and 10 years

  • Premium rate when cubic capacity is less than 1000cc is 3.191% of the IDV of the car

  • Premium rate when cubic capacity is between 1000cc and 1500cc is 3.351% of the IDV of the car

  • Premium rate when cubic capacity is more than 1500cc is 3.510% of the IDV of the car

When age of the car is more than 10 years

  • Premium rate when cubic capacity is less than 1000cc is 3.267% of the IDV of the car

  • Premium rate when cubic capacity is between 1000cc and 1500cc is 3.430% of the IDV of the car

  • Premium rate when cubic capacity is more than 1500cc is 3.596% of the IDV of the car

Comparison of car insurance premium in two different zones

The zone where a car is registered influences the premium for its insurance cover. If you compare the premium of the same car with same registration date in two different zones you can easily notice the difference in premium.

For an example, the list of 4 lowest premium rates for a Hyundai Accent car (1.5 GLS variant and 1495 cc) registered on 25th January,2016 in Kolkata ( Zone1city) is given below.

The lowest premium for this car is in between Rs. 8,520 and Rs.12,730. However, had the car been registered in any zone 2 area, the premium would have been less. Here is the 5 lowest premium rate for the same car registered in Durgapur which comes under zone 2.

These two table clearly shows that the premium rate in zone 2 is less compared to zone 1. All 4 providers that offer lowest premium for a Hyundai Accent car have come up with even lower premium for cars registered in zone 2. The maximum difference in premium is Rs. 280 in the car insurance policy offered by New India Assurance (Rs..12,219 – 11,939) and United India Assurance( Rs. 11480 – Rs. 11,200).

Additional factors that influence car insurance premium

Apart from zone, cc and age of the car, there are some more factors that influence the premium of a motor insurance policy as well. While some features like occupation discount, motor association discount and discount for installing anti-theft devices reduce premium of a new car insurance plan, some additional features like replacement of lost keys and roadside assistance increase the premium.

Conclusion

Calculation of car insurance premium keeps all the above-mentioned factors into consideration for arriving at a final amount. Hence, two cars with same cubic capacity bought at the same time in two different zones will trigger two different premiums for insurance.

There are billions of car owners in India. But, a very tiny percentage of them actually know how the premium of their car insurance plans are calculated. If you are one of those, you should understand by now how the premium for your car insurance cover has been worked out.

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