Factors Which Decide Your Car Insurance Premium In Future

In the past and now, insurance premium is decided on parameters such as the safety and security features of the car, whether the car is used for personal or commercial usage, the model etc. However, going forward, in the matter of few years, the parameters will change.

Currently, These Are The Factors Which Decide The Car Insurance Premiums:

• Fuel: diesel, CNG or LPG versions have less expensive insurance premiums than petrol cars.
• Model: Entry level cars have more expensive premiums than older cars.
• Spare parts: If your car needs expensive spare parts, the premium will be higher.
• Owner profile: You age, profession and lifestyle plays an important part for the insurance premium to be decided on.
• Safety devices: The presence of safety devices such as locks, air-bags, anti-theft and lifesaving devices will result in a cheaper insurance premium. A car that has no safety features will mean that it is more risky and thus more expensive.

In the future insurance premiums will be based more on the behavior of the user rather than the vehicle itself (as it is done now). User specific factors that influence the risk will be looked into by insurers. The following factors will play a big part in deciding the insurance premium in the future:

• Distance covered: In the future, the more you plan to use your car, the more expensive will the insurance premium be. This is because the more you travel, the higher the risk. So a person who covers only 5km per day will have to pay less than a person who covers 40 km per day. The economics of this factor is still being worked on because this means that there needs to be a devise which measures the distance travelled.
• Credit history: In many countries it is common practice to base the insurance premium on the credit score of the person as well. If the person has a good credit score, it means that he/she has a good credit history and is thus a responsible individual when it comes to their finances. Fraud control mechanisms are still being worked out for this factor to be regarded.
• Geographical location: Currently the country is divided into two zones: Zone A includes major cities such as Bangalore, New Delhi, Mumbai, Pune, Chennai, Hyderabad, Ahmedabad and Kolkata. Zone B includes the rest of the country. Since Zone A is considered to be more risky than Zone B, the premium is more expensive as well.
• Owning your home: If you own your home, rather than rent it out, insurers will consider you to be a less risky and more stable candidate and thus will offer a low insurance premium.
• Car Maintenance: If you happen to do your car maintenance and servicing at authorized centers rather than local workshops, you will be getting a lower car insurance premium. The problem with this factor in India is that Insurers find there is a lack of data as well as inflexible rating systems.

It’s not as simple as going for the low premium rates, you should make a smart decision when it comes to your car’s insurance and pick one with additional features, such as a full cover or increased cover, partial cover for fiber, glasses and paints etc. Decide what you can miss out on and what all that you need to be covered.