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How The Car Type Affects GST And Motor Insurance Premium

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In an average Indian household, buying a car still remains one of the most cherished dreams. So when one decides to buy a car, he/she would be looking to get the best deal out there. Each individual has extremely specific needs. The key factors to consider when buying a car would be its price, the size of the family, the mileage it offers, and fuel type. In case one is inclined for a second-hand purchase, the age of the vehicle and the previous ownership details may hold prime value.

The actual process of narrowing down on a suitable model can be more time-consuming than one would assume, largely due to the availability of several makes and models in the market. For the uninitiated, terms such as sedan or hatchback would only indicate the body type of the vehicle and would not probably hold as much importance as the mileage or the fuel type. However, you should note that the body type of the vehicle has a bearing on its cost and also its motor insurance premium. Hence, it could play a significant role in determining whether the purchase would fit within your budget.

Here, we take a look at the different types of cars available in India, based on their body types. We also analyse how the cost and insurance premium varies across different models.

Car Type and GST

Car Body Styles:

Some of the most notable car body styles in the Indian automobile scene are as mentioned below:

  1. Sedan - These cars are designed for comfortably seating five passengers. The trunk size of sedans are bigger; hence a large amount of luggage can be carried within. The overall dimensions of the vehicle are also larger, i.e., length, width, wheel base, and height. The car has a three-box configuration and several sub-types such as fastback, notchback, compact, etc. Some of the most popular sedans in the Indian market are Hyundai Verna, Honda Amaze, Maruti Suzuki Swift Dzire, Ford Fiesta, and Honda City.
  2. Hatchback - Hatchbacks are smaller cars with four doors and a boot. These cars can seat four passengers comfortably and the boot space can be used for storing one or two bags. The design of a hatchback determines its actual size. The hatchback could be a super mini or a larger one, based on the size of the interiors and the luggage space. These cars are suitable for use in the cities in heavy traffic conditions. These can also be parked easily and they provide good mileage. Some examples of hatchbacks are Hyundai i10, Maruti Suzuki 800, Tata Indica, Mahindra Reva, and Tata Nano.
  3. MUV - A multi-utility vehicle (MUV) or multi-purpose vehicle (MPV) is usually referred to as a people carrier. These vehicles offer increased space and comfort for the passengers, as there are two or three rows of seating. The doors are also larger than most cars and the third row can be reconfigured, if needed. Some of the notable MUVs in the Indian automobile market are the Maruti Suzuki Eeco, Maruti Suzuki Omni, and Datsun GO+.
  4. SUV - A sports utility vehicle (SUV) is a big vehicle that has a body-on-frame chassis. The ground clearance is high and off-roading capabilities of the vehicle are noteworthy. However, there have been several soft-roaders and off-roaders introduced under the SUV classification. Examples of off-roader SUVs seen in India are Mahindra Scorpio, Mahindra Thar, and Land Rover Discovery Sport. Some of the notable soft-roader SUVs are Renault Duster, Honda CR-V, and Skoda Yeti.
  5. Crossover - A crossover is a vehicle that is a combination of an SUV and a hatchback. These vehicles have soft-roading capacities. Crossovers also have unibody construction unlike SUVs that have a body-on-frame platform. Some examples of crossovers are Volvo S60 Cross Country, Maruti Suzuki S-Cross, and Hyundai i20 Active.
  6. Convertible - A convertible is also referred to as a roadster or a cabriolet. The roof of such a car can be moved to allow open air driving, if needed. The roof can also be shifted for enclosed driving. These cars have soft folding roof or retractable hardtop for this purpose. Some of the notable convertibles are Audi A3 Cabriolet, Mercedes-AMG SLC 43, and Ferrari California T.
  7. Coupe - A coupe is a closed two-door car with a roof that is fixed in place. It has a sporty appearance and two seats inside. The rear is also smaller than average cars. Nowadays, car manufacturers often refer to cars with four doors and a sporty appeal as coupes, smudging the definition a bit. The Ford Mustang, Mercedes-Benz GLE Coupe, and Audi R8 fall under the category of coupes in India.
  8. Van - Vans are vehicles that are designed for offering flexibility in using the interior space. It can have a varying number of seats and even luggage space. The vans designed for commercial purposes are Tata Venture, Tata Ace, etc.
  9. Wagon - A wagon is a combination of a sedan and a hatchback, with the added advantage of greater space behind the second row. This space can be utilised for affixing extra seats or for storing luggage. The dimensions of this vehicle are larger than that of a hatchback. Some examples of wagons are Mahindra Quanto, Maruti Suzuki Wagon R, and Maruti Suzuki Ertiga.
  10. Jeep - A Jeep is similar in design to an MUV, but there is an option of buying it with a soft top or a hard top. A jeep is suitable for cross country usage and for adventure drives. Such vehicles have the utility of a sports car with the price tag of an MUV. The Mahindra Thar, Maruti Suzuki Gypsy, and Mahindra Jeep are examples of this type of vehicle.
  11. Pick up vehicle - A pick up vehicle or van is essentially an MUV with space for luggage. The design is a combination of that of a commercial pick up van and an MUV. The vehicle seats five passengers and would weigh around 800 kg. Tata Xenon XT is an example of a pick up vehicle.

GST And Cess On Car Models:

After the GST implementation, the rate of levying GST on mid-size cars has become 45% (inclusive of cess at 2%) and that on SUVs is 50% (inclusive of cess at 7%). Large cars are levied GST at 48% (inclusive of cess at 5%), a rate that falls in between these two values.

Cars that have length exceeding 4,000 mm and with ground clearance of 170 mm and more will be levied GST at the rate of 50%.

The prices of cars had dropped immediately after the implementation of GST. The tax rates under GST were lower than the pre-GST days when the central and state taxes were combined. The drop in price was seen to be around Rs.3 lakh for some models. Subsequently, the GST Council raised the cess on mid and large cars and SUVs.

Under the GST tax regime, cars fall in the highest tax slab of 28%. The GST cess is levied over and above this taxation.

  • Small petrol cars with engine capacity below 1,200 cc are now charged 1% cess (over and above 28% GST).
  • Diesel cars with engine capacity below 1,500 cc are levied cess at 3% (over and above 28% GST).
  • Hybrid cars and vehicles used for transporting up to 13 passengers are charged GST cess at 15% currently.

The Importance Of Car Insurance:

The type of car has a bearing on its insurance premium. A comprehensive car insurance cover offers protection to the insured vehicle from natural and man-made disasters, theft, accidents, in-transit damages, etc. It is also possible to mix and match the add-on covers in car insurance and amplify the coverage offered by a comprehensive policy.

When buying car insurance, you will find that the make and model of your car and its engine capacity are key factors that determine the premium. For instance, the third-party liability premium for car insurance is completely based on the cubic capacity of the vehicle. This premium amount is a fixed value (that varies by engine capacity) and is used across the industry as a standard.

The latest guidelines published by the IRDAI in this regard are as follows:

Vehicle’s engine capacity Third-party liability premium
Not more than 1,000 cc Rs.2,055
More than 1,000 cc but not exceeding 1,500 cc Rs.2,863
More than 1,500 cc Rs.7,890

It is also found that sports models of cars and those that are branded as luxury vehicles will attract higher premiums as they are considered to bear high risk for the insurers. Additionally, cars that have alternative fuel systems such as CNG/LPG kits will attract higher premiums.

When buying car insurance, it is advisable to read through the policy documentation exhaustively, so that you are well aware of the intricacies in the fine print. This will save you a lot of effort at the taxing time of a car insurance claim.

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

Car Insurance Reviews

Page 1 of 50 1 2 3 4 5
  • HDFC Ergo Car Insurance
    "Very good"
    0.5 5.0/5 "Blown Away!"
    Even my car was insured with HDFC Ergo. It is a second-end car and have chosen the third party insurance. I have not done any claim so far. The premium is reasonable. It offers bumper to bumper facility and road side assistance. The policy period is 2 years.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 14, 2019
  • Tata AIG Car Insurance
    "Good Insurer"
    0.5 5.0/5 "Blown Away!"
    My financier suggested the Tata Aig general insurance, the premium is economical for the car policy. I have honda amaze car it got insured with them. The insurance company is providing 24 hours service, cash less garages, brake down service for the tenure of four years. On time I got the papers from the Tata Aig.
    Was this review helpful? 1
    , tirupur
    Reviewed on Jan 10, 2019
  • Tata AIG Car Insurance
    "Good Insurer"
    0.5 5.0/5 "Blown Away!"
    My financier suggested the Tata Aig general insurance, the premium is economical for the car policy. I have honda amaze car it got insured with them. The insurance company is providing 24 hours service, cash less garages, brake down service for the tenure of four years. On time I got the papers from the Tata Aig.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 10, 2019
  • National Insurance Car Insurance
    "Excellent Service"
    0.5 5.0/5 "Blown Away!"
    I had taken this Insurance policy for my Maruti Car and i had been paying the premium on an annual basis. The premium amount has not been too high and there has been cash less garages available with this insurance policy. Their customer support has also been helpful at times.
    Was this review helpful? 1
    , pune
    Reviewed on Jan 09, 2019
  • ICICI Lombard Car Insurance
    "Nice Policy"
    0.5 4.0/5 "Great!"
    My car was insured with ICICI Lombard. Last year i have purchased this insurance policy. My wife has referred me about this policy. I pay the premium amount of Rs. 13500. They have given me a convenient IDV value. I had no claim experience so far.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 09, 2019
  • New India Car Insurance
    "Need to improve the service"
    0.5 3.0/5 "Satisfactory"
    I'm not satisfied with the service provided by new India. I have bought the car insurance policy. They closed their branch on every weekends hence its difficult to renew the policy. I have been paying the premium amount of Rs. 14000 which is a competitive price. They have given the IDV value of Rs. 1.50 lakhs.
    Was this review helpful? 0
    , mangalore
    Reviewed on Jan 09, 2019
  • New India Car Insurance
    "Average Car Insurance"
    0.5 3.0/5 "Satisfactory"
    My car insured with the New India Insurance company. I have been renewing the policy with the same company for 3 years. I have paid the premium amount of Rs. 7000 and they have offered me a satisfied coverage value. The documentation process was fine
    Was this review helpful? 0
    , mangalore
    Reviewed on Jan 09, 2019
  • review Car Insurance
    "Its Good"
    0.5 3.5/5 "Pretty good"
    Last year I had car policy with Bharthi axa whenever I try to renew it ask my poliy no, whenever I mention the same, it shows the its incorrect. If I try to reach the customer care its not reachable. I done the claim, some minor damage back side of the car, they have processing fee 1500. Remaining all taken care by the insurer.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 08, 2019
  • ICICI Lombard Car Insurance
    "Great Policy"
    0.5 4.0/5 "Great!"
    ICICI Lombard has a good brand value hence i have selected the car insurance policy with this card and the dealer has also recommended about this policy. I pay the premium amount of Rs. 9000 and this is a 100% coverage with bumper to bumper facility. I'm not sure about the IDV value. Its easy to renew the policy.
    Was this review helpful? 2
    , new delhi
    Reviewed on Jan 08, 2019
  • ICICI Lombard Car Insurance
    "Good"
    0.5 5.0/5 "Blown Away!"
    Previously my car was insured was with ICICI Lombard and it was offered by the showroom. I got a call from the representative for the policy renewal as reminder. I got the insurance paper. I have not done done a claim. It is a comprehensive with zero dep. The premium was high so changed my insurer.
    Was this review helpful? 1
    , mumbai
    Reviewed on Jan 08, 2019
  • Future Generali Car Insurance
    "Good"
    0.5 4.0/5 "Great!"
    I have taken a car insurance from Future Generali through online portal. The premium was reasonable and also they have provide bumper to bumper facility. The policy period is one year. There is no interaction between the customer service. I just gave my car for the claim so no experience.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 08, 2019
  • Oriental Insurance Car Insurance
    "Good insurance company"
    0.5 2.0/5 "Expected more"
    Dealer has referred me about this oriental car insurance when i purchase the vehicle. They have rejected the claim since the copy of FIT is not available. They have given me a coverage value upto Rs. 6 lakhs. For the past 3 years i have been renewed the policy with the same company.
    Was this review helpful? 1
    , chennai
    Reviewed on Jan 07, 2019
  • Iffco Tokio Car Insurance
    "Good Policy and you can try"
    0.5 4.0/5 "Great!"
    Two months before, i have taken my car insurance policy with Iffco Tokio. Its a PAN India agreement policy for my Maruti Car. I don't remember about the coverage value. This is a zero depreciation policy. I paid the premium amount of Rs. 6500. I have not seen any add on and cashless garage facility.
    Was this review helpful? 1
    , chennai
    Reviewed on Jan 07, 2019
  • Reliance General Car Insurance
    "Its Excellent"
    0.5 4.0/5 "Great!"
    My brother is working with Reliance hence I took my two wheeler policy from this insurance company. I have hyundai accent car, they are providing cash less garages for the damage. I have zero depreciation bumper to bumper policy for the term of one year.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 07, 2019
  • Reliance General Car Insurance
    "Good Policy"
    0.5 5.0/5 "Blown Away!"
    My car insurance policy was taken with reliance. The dealer has provided me a policy with this policy. This is a 100% coverage value which covers the bumper to bumper facility, They have given me a IDV value of Rs. 11 lakhs. I pay the premium amount of RS. 33000.
    Was this review helpful? 0
    , thane
    Reviewed on Jan 04, 2019
  • HDFC Ergo Car Insurance
    "Good service provider"
    0.5 4.5/5 "Excellent!"
    The reason to avail HDFC Ergo policy, my banker have suggest this insurer for my car. They gave me the best insured value around Rs. 6 lakhs based on the vehicle age. I have Hyundai I20 car, they are providing 24/7 helpline and cashless service.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 04, 2019
  • ICICI Lombard Car Insurance
    "Good Policy to take"
    0.5 3.0/5 "Satisfactory"
    My car was insured with ICICI Lombard. I pay the premium amount of Rs. 22000 and i have been renewing the policy continuously for 2 years. They have provided me a no claim bonus. Its covered with bumper to bumper facility. My dealer has recommended me about this policy when i purchase a car.
    Was this review helpful? 1
    , chennai
    Reviewed on Jan 03, 2019
  • Iffco Tokio Car Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    I have a car insurance with IFFCO TOKYO from last 1 year, there was no claim experience so far with this insurance policy. I pay a premium of Rs 5500 for this car insurance. This is a first party insurance with 0% depreciation and the coverage value is good.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 03, 2019
  • Bajaj Allianz Car Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    I have a car insurance policy with Bajaj allianz from last 2 years, a premium of Rs 13000 has to be paid for this insurance policy. There was no claim experience so far with this car insurance. This policy has full coverage with 0% depreciation.
    Was this review helpful? 0
    , secunderabad
    Reviewed on Jan 03, 2019
  • Tata AIG Car Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    I am having a car insurance with TATA AIG from last 1 year, a premium of Rs 7272 has to be paid for this car insurance policy. I did not claim anything so far from this insurance policy. I am happy with the plan benefits and policy coverage of this insurance.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 03, 2019
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