The wide range of motor insurance products offered by numerous leading insurance companies in India make it very difficult for a layman to decide on the most appropriate policy. So when looking to buy motor insurance, it is quite possible that you may reach a state of confusion.
Almost all general insurance companies today offer you the facility to compare policies online and buy a suitable cover. They also enable you to calculate the premium for a plan using the motor insurance calculator facility. This is a very useful service, as customers can get an estimate of the amount they will be setting aside towards motor insurance per year.
Benefits Of Using A Motor Insurance Calculator
The motor insurance premium calculator tool is advantageous in the following ways:
- When you are planning to buy motor insurance, you can first use the tool and calculate the premium for a particular plan. This way, the overall process of policy purchase becomes quick and effortless.
- When you use the motor insurance calculator tool and buy insurance online, you are not pressurised by insurance agents or any other such middlemen to complete the process in haste. Essentially, the tool gives you complete freedom to make a purchase decision in a well-informed manner.
- You can alter the variables provided as input to the premium calculator tool and see the change in premium. This helps you make an informed decision on the coverage when making the final purchase.
How To Use The Motor Insurance Premium Calculator Tool
The motor insurance premium calculator facility is extended to new and used cars alike. In order to determine the approximate premium for a specific motor insurance plan, you will be required to provide the following details as input:
- The make and model of the vehicle
- The subtype of the vehicle
- The city of registration
- The age of the car
- Your name and mobile number
You should then click on the ‘Calculate Premium’ button to get a quick quote. The premium quote usually considers the complete No Claim Bonus (NCB) and uses a system-generated IDV. This premium is just an estimated value and the actual amount may differ.
How Do Insurers Calculate Motor Insurance Premiums?
Motor insurance premium is based on a set of factors, the most important of them being the Insured Declared Value (IDV) of the vehicle. Here is a detailed description of the factors that influence motor insurance premium:
- Cubic capacity of the vehicle - The third-party liability premium for motor insurance is a value fixed by the Insurance Regulatory and Development Authority of India (IRDA) on an annual basis. It depends on the engine capacity of the vehicle. The values for the financial year 2017-18 are as follows:
For private cars:
|Up to 1,000 cc||Rs.2,055|
|More than 1,000 cc but not greater than 1,500 cc||Rs.2,863|
|More than 1,500 cc||Rs.7,890|
|Up to 75 cc||Rs.569|
|More than 75 cc but not greater than 150 cc||Rs.720|
|More than 150 cc but not greater than 350 cc||Rs.887|
|More than 350 cc||Rs.1,019|
The values for goods carrying public and private vehicles are different from these.
- Depreciation of vehicle parts - The depreciation of a vehicle is a significant factor that governs the own-damage premium for its insurance. Every vehicle undergoes depreciation with age, as shown in the table below:
|Age of the vehicle||Percentage depreciation|
|6 months or lesser||5%|
|Above 6 months but lesser than 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 IDV is essentially the market value of the vehicle less depreciation with age. As the vehicle gets older, the depreciation is higher. This leads to a lower IDV.
Since own-damage premium is a percentage of the IDV, it will be lower for older vehicles.
- Model and make of the car - The parts of high-end vehicles will be harder to procure and more expensive to replace. These vehicles are also more likely to be involved in a theft. Hence, the owner of an expensive vehicle will have to pay a higher premium for its insurance.
- The place of registration of the vehicle - If the vehicle is being used in an area where accidents are common, then it would cost more to insure it. Moreover, parking the vehicle in an area that is prone to thefts would also hike the premium for its motor insurance.
- Age of the owner-driver - Vehicle owners below the age of 25 years are considered to be more risky to cover. Hence, these individuals will have to bear higher motor insurance premiums.
- Fuel types - It would be more expensive to buy insurance coverage for a vehicle that is fitted with a CNG/LPG kit.
- Discounts - Motor insurance companies offer numerous discounts to customers. If a customer is eligible for a discount, it will bring down his/her motor insurance premium considerably.
The discounts that are usually offered are described below:
- Profession-based discounts - Government servants, people working as defence personnel, and doctors get special discounts on motor insurance premiums.
- No Claim Bonus - If a policyholder has not raised any claims in a year, he/she is eligible to receive a bonus that can bring down his/her motor insurance renewal premium. This is referred to as the No Claim Bonus (NCB), and is a very attractive benefit in motor insurance.
- Voluntary deductibles/excesses - Voluntary deductibles are the components of a claim amount that the policyholder chooses to pay. This is decided at the time of policy inception. Opting for higher voluntary deductibles implies that the premium for the motor insurance policy will be lower.
- Anti-theft device discount - The Automotive Research Association of India (ARAI) has a specific set of approved anti-theft devices. Installing any of these in a vehicle can bring down its motor insurance premium considerably. Having additional security gear in the vehicle also implies that it is less likely to be involved in a theft. So insurers encourage the use of such devices by offering premium discounts to these vehicle owners.
- Discounts for online purchase - Most insurance companies allow you to buy motor insurance online. The benefits of online purchase are many, the most important one among them being the fact that online policies are much cheaper than offline ones. When an insurer sells a policy online, it does away with the processing and distribution costs that are usually associated with offline sales through insurance agents. These benefits are, in turn, passed on to the customer in the form of premium discounts.
In addition to the above, it is advisable to renew your motor insurance on time. Renewing the policy before the expiry date ensures that you receive the best price on insurance. Delaying the renewal beyond a specific period of time (usually 3 months) may also result in a situation wherein you lose your hard-earned NCB.
- Bajaj Allianz Motor Insurance
- Bharti Axa Motor Insurance
- Chola MS Motor Insurance
- Future Generali Motor Insurance
- ICICI Lombard Motor Insurance
- IFFCO Tokio Motor Insurance
- Liberty Motor Insurance
- Magma HDI Motor Insurance
- National Motor Insurance
- New India Motor Insurance
- Oriental Motor Insurance
- Reliance Motor Insurance
- Royal Sundaram Motor Insurance
- SBI Motor Insurance
- Shriram Motor Insurance
- Tata Aig Motor Insurance
- United India Motor Insurance
- Universal Sompo Motor Insurance
Motor Insurance Calculator FAQs:
- What is the formula for calculating motor insurance premium?
The formula for calculating the premium for motor insurance is very simple:
Total premium = Own-damage premium + Third-party liability premium + Cost of add-on covers - Discounts
- Can I use motor insurance calculator when renewing my policy?
The motor insurance calculator tool can be used at the time of buying motor insurance for the first time. In case you are someone looking to renew your insurance policy, you can use the motor insurance renewal premium calculator and arrive at a quote. The tool is equally simple and hassle-free.
- Why is there a difference between the motor insurance premium calculator quote and the actual premium charged?
The difference you see between the actual premium and the quote from the motor insurance premium calculator tool is purely based on the way in which premium is calculated by the company.
Insurance risk assessment is governed by statistics and historical records of accidents of the customer. After the insurer obtains all the required information about the customer, it will analyse the data and predict whether the applicant is likely to raise a claim under the policy. With higher probability of claim, the premium will be higher as well. This assessment is done by the underwriting department of the insurer. So, the final value of premium the company offers is likely to differ from the quote provided by the calculator tool.
- What is cubic capacity of a vehicle?
The capacity of the vehicle’s engine is referred to as its cubic capacity. It affects the premium for the third-party insurance cover. So, for vehicles with higher cubic capacity, the motor insurance third-party liability premium will be higher.
- I have heard that I can get a premium discount if I am part of some automobile associations. Is this true?
Yes, this is true. If you are a member of the Automobile Association of India (AAI) or any of its regional wings, you are eligible for a motor insurance premium discount.