Factors that Affect Motor Insurance Premium Price

Updated Oct 14, 2023

Factors that Affect Car Insurance Premium Price

The cost of a car insurance premium depends on a variety of factors, such as the make and model of your car, the registration year, the claim history, etc. All of these would affect the car insurance premium. The effect of these factors on insurance premium varies with coverage. There are also certain factors which are variable and can be modified so as to have an impact upon the car insurance premium.

Key Factors That Affect Car Insurance Rates

These are the key variables which will impact your car insurance premium.

1. Car Insurance Add-Ons

A standard motor insurance policy provides coverage for a considerable range of damages to the motor vehicle. Along with the basic motor insurance policy, however, one can avail of a range of car add-on covers that provide additional coverage in varied and specific scenarios. Many car insurance add-ons will offer liability coverage and protection in a variety of scenarios you may be affected by on a regular basis, and which are risks that you can be left exposed to in the case of a standard insurance policy. Add-ons are an important insurance premium variable as their addition to a policy will have an impact on the premium and lead to an increased premium.

2. Opting for Voluntary Deductible

This means that you as the policyholder declare to the insurance company that at the time of raising a claim, you would pay a certain percentage of the claim amount. Therefore in any unfortunate situation or accident wherein you are faced with monetary loss and need to raise an insurance claim, some amount of the claim amount would be paid from your pocket. However, while this would lead to a discounted premium and saves money from the premium amount, it is not advisable as it increases your liability at the time of a claim.

3. Modifications that are Proactive Measures

Proactive measures refer to modifications added to the vehicle that reduce the risk of theft of your vehicle, such as anti-theft measures or devices, especially those that are approved by the Automobile Research Association of India (ARAI). These devices are seen as proactive measures by insurance companies as they reduce the likelihood that you would need to raise a claim in the future as the possibility of loss of your vehicle by theft is reduced. This variable will thus likely fetch a discount on the insurance premium and save some expenditure.

Conclusion

There are thus many factors that influence the premium cost of your car insurance. Many are unchangeable such as the year of registration and the make and model of your car. However, certain variables can also influence the cost of the premium, and the most important of these are any car insurance add-ons that you take up, any proactive modifications, and opting for voluntary deductibles. These allow you to tailor your policy according to your needs and be cautious of the cost of your premium, allowing you to save expense in certain cases.