We all know that, whenever we take a car insurance policy, we have to pay a certain amount in the form of premium. It is a burden on our pocket. At the same time we cannot ignore buying a car insurance policy as it is mandatory in India under the law. The only way and the best way to handle the car insurance premium is that we must be aware about the factors that affect the premium of car insurance policy.
If you are aware of all the factors and have knowledge about the factors that affect premium, then you can minimize your premium as well as get the same benefit or coverage that you were getting earlier.
Factors affecting Car Insurance Premium
1. Geographical Location
The geographical location that is where you live or have bought the motor insurance plan also affect the premium. The premium is very low in areas where traffic is low. On the other hand in metropolitan cities where traffic is high all the time, premium rates are also high.
2. Demographic factors or Personal factors
Car Insurance premium is also decided on the basis of person’s gender,age etc. Women pay less premium as they are considered safe driver than men. Similarly married men pay less premium as compared to bachelors. People coming under the age of 25 years pay high premium whereas people belonging to age group 50 to 65 years pay premium at lower rates.
3. Coverage Type
Car Insurance premium is also dependent upon the benefits or coverage a car insurance policy offers. There are generally two types of motor insurance plan – third party insurance and comprehensive car insurance. Comprehensive car insurance is comparatively costlier than the former as if offers the bundles of benefits.
4. Types of Engine
Well, a car which runs on diesel is costly and hence its premium is also expensive. On the other hand car insurance premium for cars that runs on petrol or CNG is less costly.
5. Customizable Car Insurance Plan
A car insurance plan which is customized has higher premium rates. As it consists of all the benefits that you want in your motor insurance. A non customizable car insurance policy is cheaper as it does not offer everything according to your needs.
6. Installation of Security System
The premium also depends upon the type of security system installed in your car. If you are having the security system installed in your device, then the premium will be high.