Motor insurance is known as an essential aspect of vehicle ownership, which provides you with financial protection against unforeseen accidents, damages, and liabilities. The motor insurance premium is paid in a scheduled period to maintain insurance coverage for your vehicle. It reflects the risk profile presented by the insured vehicle and the driver to the insurer. The cost of insurance premiums is influenced by the chosen coverage type, vehicle attributes and history of claims made.
Thus, the interpretation of how the four wheeler insurance premium is calculated can help you identify cost-saving opportunities as well as let you choose the optimal coverage.
- Components of Four-Wheeler Insurance Premium
- Factors That Determine the Premium Amount
- Insured Declared Value (IDV)
- Vehicle Make, Model and Variant
- Engine Capacity
- Age of the Vehicle
- Registration Location
- Claim History and No Claim Bonus
- Role of Add-On Covers in Premium Calculation
- Using an Online Premium Calculator
- Final Thoughts
Components of Four-Wheeler Insurance Premium
The motor insurance premium comprises the following principal parts:
| Component | Description |
| Third-Party Liability Premium | Mandatory car insurance to cover the damages caused to third parties. |
| Comprehensive Cover Premium | Variable element reflects coverage for damage to the insured vehicle due to accidents, fire, theft or other insured events. |
Factors That Determine the Premium Amount
There are multiple factors that influence the four-wheeler insurance renewal. Some of them are as follows:
Insured Declared Value (IDV)
Insured Declared Value is the current market value of the vehicle after depreciation due to age. Because IDV is the maximum amount of payout in case of own damage coverage, the higher the IDV, the higher the premium.
Vehicle Make, Model and Variant
The premium depends on the manufacturer, model, and specific model. It also depends on market price variations, complexity of the repair, and cost of the spare parts. Cars that are in premium market segments or those with advanced technology tend to be charged higher own damage premiums.
Engine Capacity
Engine capacity has a direct impact on the premium since it is associated with vehicle performance, repair cost, and the risk of accident severity. Regulatory slabs raise the third-party premium charged to a vehicle with a larger engine, and you may also need to pay more upfront for engine-related repairs.
Age of the Vehicle
Ageing of vehicles decreases their IDV, which lowers the own damage section of the premium. Since older cars are prone to mechanical issues, they might be rated as risky by the insurers. This situation often increases the car’s premium.
Registration Location
Risk assessment is highly influenced by the city or region in which a vehicle is registered. Areas that have high traffic density and accident rates attract higher premiums than areas with low exposure.
Claim History and No Claim Bonus
The claims history of a policyholder can have a direct impact on the premium through the practice of No Claim Bonus. Having a claim-free term of policy can lead to premium discounts on the own damage premium.
Role of Add-On Covers in Premium Calculation
Add-on covers are an addition to the standard comprehensive insurance to increase the scope of protection. Add-ons like zero depreciation cover, engine protection, roadside assistance or consumables cover can increase the premium since they reduce the probability of amount paid by the policyholder when making claims.
Although add-ons increase both the initial price, they might provide enhanced financial stability in the case of repairs. For example, zero depreciation cover allows you to get the full amount of replaced parts if your vehicle has been repaired. Such add-on benefits help you preserve the value of your car’s actual invoice amount.
Using an Online Premium Calculator
Online premium calculators allow you to simplify the car insurance premium estimate by applying the same pricing principles used by insurers. The following are the most common steps to get an estimate of your car insurance premium:
- Enter your name, mobile number, city and car registration number.
- Enter vehicle registration number or manually select make, model and the variant.
- Fill out vehicle details such as year of manufacture, fuel type and registration location.
- Choose policy type between comprehensive or third-party only.
- Select required add-on covers and declare applicable No Claim Bonus.
Once you submit all of this information, you’ll be able to review the calculated premium displayed instantly.
Final Thoughts
The calculation of the four-wheeler insurance premium is driven by the vehicle’s IDV, engine capacity, age, region of registration and the policyholder’s claim history. Each of these elements directly influences the risk assessment and the premium amount. Furthermore, add-ons can alter this cost because of increased protection. Thus, revision of these factors and using an online premium calculator allows you to estimate the premium with higher accuracy.
