How Your Locality Determines your Auto Insurance Premium
Your car insurance premium is influenced by factors like your city of registration. Vehicles registered in high-risk areas like Zone A cities, which have heavier traffic and higher accident rates, typically attract higher premiums compared to those registered in Zone B cities.
After the purchase of a new car, you would have protected it with an appropriate auto insurance plan for which you pst of your policy?
In India, the premium for a motor insurance policy is determined by a number of parameters, namely:
- Cubic capacity of the vehicle
- Insured Declared Value of the car - this is the maximum amount that you can claim on your auto insurance policy
- Fuel type, i.e., LPG, diesel, or petrol
- Utilisation of the car, i.e., whether the vehicle would be used for private or commercial purposes
- City of registration
- Occupation of the policyholder
- Motor association membership
- Installation of anti-theft devices
So how does the city where the car was registered impact the cost of its auto insurance?
The zone where the registration was done plays a pivotal role in identifying the value of premium. Other deciding factors such as the age of the vehicle and its cubic capacity are also influenced by zones where the registration took place.
India is divided into two such zones for the purpose of premium calculation. Zone A includes the 8 prominent cities of Chennai, Mumbai, Kolkata, Bangalore, Hyderabad, Pune, Ahmedabad, and New Delhi, while Zone B covers the rest. Zone A cities are locations that are more prone to risks arising from heavier traffic and greater population. These factors are seen to contribute towards higher instances of accidents and thefts. Hence, if your vehicle was registered in one of the cities falling under Zone A, you are liable to pay more for your auto insurance.
Car insurance premiums are also impacted by other parameters such as the age of the car and its cubic capacity. Cost of policies in the two zones based on these two factors are determined as follows:
Zone A
If we consider that the age of vehicles are constant, the varying cubic capacity determines the rate of premium.
- When the car is less than 5 years old,
- For cubic capacity less than 1000cc, the premium is 3.127% of the car?s IDV.
- For cubic capacity between 1000cc and 1500cc, the premium is 3.283% of the car?s IDV.
- For cubic capacity more than 1500 cc, the premium is 3.440% of the car?s IDV.
- When the car is between 5 and 10 years of age,
- For cubic capacity less than 1000cc, the premium is 3.283% of the car?s IDV.
- For cubic capacity between 1000cc and 1500cc, the premium is 3.447% of the car?s IDV.
- For cubic capacity more than 1500 cc, the premium is 3.612% of the car?s IDV.
- When the car is above 10 years of age,
- For cubic capacity less than 1000cc, the premium is 3.362% of the car?s IDV.
- For cubic capacity between 1000cc and 1500cc, the premium is 3.529% of the car?s IDV.
- For cubic capacity more than 1500 cc, the premium is 3.698% of the car?s IDV.
Zone B
Car insurance policies in Zone B have lower rates of premium, as shown below:
- When the car is less than 5 years old,
- For cubic capacity less than 1000cc, the premium is 3.039% of the car?s IDV.
- For cubic capacity between 1000cc and 1500cc, the premium is 3.191% of the car?s IDV.
- For cubic capacity more than 1500 cc, the premium is 3.343% of the car?s IDV.
- When the car is between 5 and 10 years of age,
- For cubic capacity less than 1000cc, the premium is 3.191% of the car?s IDV.
- For cubic capacity between 1000cc and 1500cc, the premium is 3.351% of the car?s IDV.
- For cubic capacity more than 1500 cc, the premium is 3.510% of the car?s IDV.
- When the car is above 10 years of age,
- For cubic capacity less than 1000cc, the premium is 3.267% of the car?s IDV.
- For cubic capacity between 1000cc and 1500cc, the premium is 3.430% of the car?s IDV.
- For cubic capacity more than 1500 cc, the premium is 3.596% of the car?s IDV.
is greatly influenced by the area in which the vehicle is registered. Hence, the same vehicle will attract different premiums if it was registered on the same day in two different zones.
Summary
As mentioned above, the calculation of your car insurance premium is based on a number of factors. All car owners should ideally have an understanding of the elements that affect their auto insurance premiums, so that they can make well-judged decisions at the time of policy renewal.
GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017
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