Car Insurance Premium Calculator

Every car insurance policyholder has to pay a premium towards the plan. To find out how much you have to pay, you can use a premium calculator available on insurers’ websites. The premium is calculated by a simple formula.

In recent times, owning a car has not only become a status symbol but also a necessity. A car is an asset that is seen as a milestone in everybody’s life. A prudent choice to make after buying a car is obtaining a car insurance. A comprehensive car insurance cover will act as a financial safeguard against unexpected accidents and minor mishaps on the road. A car insurancepolicy is mandatory in India by law and it will also ensure that you and your vehicle stay safe always.

Car Insurance Premium Calculator

What is Car Insurance Premium Calculator?

  • Car insurance premium calculator is a dynamic tool provided, online, by car insurance companies.
  • Almost every reputed motor insurance company has an insurance premium calculator on their official portal.
  • With the help of the car insurance calculator, customers can get a quote for their car insurance policy and the premium amount they need to pay for the same.
  • Just visit the ‘car insurance calculator’ page and fill in some basic information about yourself like the policyholder’s name, contact details and address, followed by some standard details about the insured/to be insured car.
  • These details are – car manufacturer’s name, model number of the car, manufacturing year, car sub-type (if any), fuel type and registration date.
  • Some companies also give you an option of selecting if you want to insure the accessories installed inside the car.
  • After you have filled the details correctly, just click on the ‘calculate premium’ button and you will immediately get the quote.
  • After this, you also get an option to get more information and payment option to buy car insurance of your choice.

How is the Car Insurance Premium Calculated?

This simple formula will help you understand the car insurance premium calculation better. Premium = Own Damage Premium – (No claim bonus + discounts) + Liability Premium as Fixed by the IRDAI + Cost of Add-ons

A sample car insurance calculation is described below for your understanding.

Year of Manufacture 2012 Comprehensive Policy with NCB (all values in Rupees)
Ex Showroom Price 4,16,000 (X)
Depreciation Percentage 20% * X Rs.83,200 (Y)
Insured Declared Value (IDV) 3,32,800 (X - Y) Rs.3,32,800 (Z)
Own Damage Premium 1.970% Rs.6,556 (A)
NCB discounts 20% * A Rs.1,311 (B)
Total OD Premium 5,425 (A - B) Rs.5,245 (C)
Personal Accident Cover 100 (D)
Legal Liability Paid to driver 50 (E)
Compulsory Third Party Cover 1,110 (F)
Net Premium 6,505 (C + D + E + F) Rs.6,505 (G)
GST @ 18% 18% * G Rs.1,171 (H)
Total premium 7,676 (G + H) Rs.7,676

Factors that affect the Car Insurance Price:

The premium of car insurance depends on the following factors:

  1. IDV (Insured Declared Value) of the vehicle
  2. Type and age of the vehicle
  3. Cubic capacity of the engine
  4. Geographical zone
  5. Age and gender of the owner-driver
  6. Fuel type
  7. Profession of the owner
  8. Voluntary deductible
  9. No Claim Bonus (NCB)
  10. Anti-theft device installation

Car Insurance Premium Calculated on the below Mentioned Factors:

A “Package Policy” has two main components namely ‘own damage premium’ and ‘liability premium’. It is important to note that liability premium is fixed by the insurer. It is the minimum statutory premium to be paid as fixed by IRDAI (Insurance Regulatory and Development Authority of India). The liability premium amount depends on the engine power of your car. More the cubic capacity, more will be the premium.

The third-party liability premium chart (for private cars) released by the IRDAI for the financial year 2017-18 is as follows:

Engine Capacity Premium effective from 1 April 2018
Less than 1,000 cc Rs.1,850
Between 1,000 cc and 1,500 cc Rs.2,863
More than 1,500cc Rs.7,890

Let us look at some important components that influence the premium of a comprehensive/package policy:

  • Insured Declared Value or IDV of the Vehicle
    • At any point, your car is worth some value. Assuming you had insurance for your car, the value will help the insurance company decide on the compensatory amount. IDV will decide the value of your vehicle at any given point of time under a comprehensive car insurance cover.
    • Simply put, IDV is the maximum amount that you can claim for any loss or accident of the vehicle. It is one of the important factors that greatly affect the premium.
    • IDV = Ex-showroom price of your car + cost of accessories (if any) – depreciation value as per IRDAI
    • Depending on the age of the vehicle, the depreciation ranges from 5% to 50% of the ex-showroom price.
  • No Claim Bonus (NCB)
    • In order to reward policyholders for being a responsible driver, insurance companies have come up with the concept of No Claim Bonus. You are entitled for a NCB discount if you have not made a claim the previous year. If you have a NCB component in your policy, you can save up to 50% on the own damage (OD) premium.
  • Discounts
    • There are some additional discounts that are offered under own damage premium. Some of these discounts are as mentioned below:
      • Installation of an anti-theft device like a car alarm can help you get a discount on car insurance premium.
      • Getting a membership in Automobile Association of India (AAI) is a great way to avail a discount in premium.
      • Opting for voluntary deductibles/excesses can lower your premium.
      • Car insurers offer profession-based discounts to defence personnel, government employees, and doctors.
  • Loadings
    • Any electrical or electronic accessory that is fitted in the vehicle like CD/DVD players, CNG or LPG units, but is not included in the manufacturer’s selling price of the car is insured at an extra amount.
  • Age and gender of the car owner
    • Individuals below 25 years of age are considered to be more risky drivers. Hence, insurance providers offer car insurance at a higher premium for people in the age group of 18 years to 25 years.
  • Make and model of the car
    • High-end cars such as Bentley and Audi are insured at a higher cost when compared to more affordable vehicles like Santro and Alto. Similarly, SUVs are charged higher insurance premiums than ordinary family hatchbacks.
  • Geographical location
    • Since the density of traffic is high in cities, you will have to shell out a higher amount to get your car insured there.
    • Moreover, the incidence of thefts and robberies are considered to be high in urban areas. This directly impacts the premium of car insurance.
  • Fuel type
    • A CNG fitted car will be costlier to insure than diesel and petrol models.
    • Also, a diesel car will attract a higher insurance premium than a petrol car. This is due to the following reasons:
      • A diesel car is more expensive than a petrol car of the same model. Since the premium for car insurance is directly proportional to the cost of the car, the premium will be higher for the diesel variant.
      • It is more expensive to get a diesel car repaired post an accident, when compared to a petrol car.
      • Diesel cars have gained a lot of popularity in the recent years. When diesel cars became as attractive as their petrol variants, the insurance premiums for these vehicles also witnessed a hike.
  • Year of manufacture
    • The older the car is, the lesser will be its IDV. This leads to a lower insurance premium as well.

Use Online Car Insurance Calculator and Make a Prudent Purchase Decision:

A car insurance calculator, apart from enabling you to calculate the premium online, also helps you compare policies between different car insurance providers. This caters to the varying needs of customers, as it helps them evaluate the options available in the market and narrow down on a plan that suits their needs. You can also buy a car insurance policy online in a few simple steps following policy comparison.

Benefits of Car Insurance Premium Calculator:

  • The car insurance premium calculator is easy to use and yields results in a few minutes.
  • You can use it at the convenience of your home and benefit from a hassle-free and paperless policy purchase experience.
  • One of the major advantages of a car insurance calculator tool is that you would not be influenced by insurance agents who, after all, are working towards attaining their sales targets.
  • On the calculator tool, you can change the variables of coverage and see how the premium changes accordingly. The tool is a great medium to educate yourself on the nuances of a plan and hence, helps you in making the best decision at the time of buying a policy.

Premium Calculation for Used and New Cars:

Every car insurance company uses its own set of parameters to calculate the premium for a policy. However, the factors that are considered by most insurers are listed below:

  • Premium calculator for used cars - The online car insurance calculator tool helps you in procuring the most appropriate auto insurance policy for your vehicle in a transparent and convenient manner. To calculate the premium for used cars, you will have to provide the following details:
    • Type of car
    • Fuel type
    • Details of the existing car insurance policy
    • Registration number of the car
    • Details regarding change in ownership
    • Claims for previous years, if applicable

The used car insurance calculator tool will show you the premium required to insure the vehicle in a matter of seconds.

  • Premium calculator for new cars - The new car insurance calculator tool provides a listing of top insurers and their car insurance products in a few simple steps. This offers a new car owner the much needed guidance in narrowing down on an appropriate auto insurance policy for his/her prized set of wheels. The details you would have to provide to calculate the premium for insuring a new car are:
    • The name of the car manufacturer
    • The model of the vehicle
    • Year of manufacture
    • Personal details of the owner-driver
    • State of registration of the vehicle

Tips to Reduce Car Insurance Premium:

  1. No Claim Bonus is an easy way to progressively reduce your premium. For example, consider the following scenario where because of NCB, the premium is being lowered gradually.
IDV of the Vehicle Premium – with NCB discounts Premium – without NCB
Year Value in Rs. NCB % Premium Amount in Rs NCB % Premium Amount in Rs
Year 1 3,60,000 0 11,257 0 11,257
Year 2 3,00,000 20 9,006 0 11,257
Year 3 2,50,000 25 7,036 0 9,771
Year 4 2,00,000 35 5,081 0 9287
  1. Another way through which you can reduce premium is to become a member of the Automobile Association of India (AAI) and by installing anti-theft and locking devices in your car.
  2. Also, you have to ensure that the IDV of your vehicle is judged correctly before the policy is issued. This will not only ensure that you are being charged the right premium but will also guarantee a hassle-free claim process.
  3. Select your vehicle carefully based on your need. Don’t buy an SUV if you are commuting less than 50kms a month. Remember, the showroom price and CC of your car also add to the premium amount.
  4. Drop any unnecessary add-on covers which will otherwise increase your premium costs.
  5. As mentioned above, opting for voluntary deductibles at the time of buying auto insurance is a great way to reduce the premium you pay towards it. If you are a confident driver, you can go ahead with a high voluntary deductible amount. This will bring down the premium by a considerable amount. However, ensure that you will be able to pay the voluntary deductible amount in the unlikely (but possible) situation of a car accident.

Car Insurance Calculator FAQs:

  1. Do vintage cars receive any discounts on auto insurance premium?

    A discount of 50% will be offered on the third-party liability premium of vintage cars. These vehicles should be certified as vintage cars by the ‘Vintage and Classic Car Club of India’ to avail this benefit.

  2. Can I use the online car insurance calculator tool when renewing my auto insurance?

    Yes, this is possible. At the time of car insurance renewal, you can compare policies between insurance companies and decide on an appropriate plan using the car insurance premium calculator tool.

  3. What are the benefits of being a member of AAI?

    If you are a member of the Automobile Association of India (AAI), you can avail the following benefits:

    • You can get an international driving permit (IDP) issued in your name in a hassle-free manner.
    • The association will guide you through the process of re-registration of vehicles.
    • The automobile association has the power to transfer the ownership of a vehicle. So, if needed, a member can contact the association for the same.
    • The association helps a member in getting his/her address details updated in the driving license.
    • AAI helps you in procuring a duplicate license in case you have lost the original.
    • The association helps you in the renewal of your driving license.
    • You can get a discount on auto insurance premium by being a member of AAI.
  4. How does the IDV of a car reduce with age?

    The depreciation of a car increases as the vehicle gets older:

    Age of the car Percentage of depreciation
    Less than 6 months 5%
    Between 6 months and 1 year 15%
    Between 1 and 2 years 20%
    Between 2 and 3 years 30%
    Between 3 and 4 years 40%
    Between 4 and 5 years 50%

    The depreciation of a vehicle is inversely proportional to its Insured Declared Value (IDV). This implies that the IDV decreases as the car ages.

  5. Does the comprehensive auto insurance plan include personal accident cover for the passengers?

    No, a comprehensive car insurance policy only offers personal accident cover for the owner-driver. If the passengers also need personal accident protection, you will have to include an add-on cover that provides you this coverage.

Car Insurance Guide Page

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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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