Car Insurance

covers your car against risks like theft, accident, explosion etc.

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Factors That Determine Car Insurance Premium

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When you buy car insurance, there are various details asked from you. Most of these details help insurance companies in identifying the Risk involved in providing you the coverage. This information helps in determining the Premium and easy and quick car insurance claims settlement. It include details of car as well as the user. Also, there are certain factors which can help you get a cheaper coverage. The following list provides major determinants of car insurance premium:

1.Car Details:

Different cars have different security arrangements. Insurance premium is low for those cars with higher security features, since the risk involved is low. Similarly, cars having higher value will have higher premium because the Coverage will be high. Some important car details which are good determinants of your car insurance premium include:

Family of Car: There are different rates on the basis for different types of car. Your car may be an SUV, sedan, small car, or may belong to luxury car segment; insurance premium will be as per the type and make of your car.

Name of the manufacturer: Insurance premium for cars from Indian manufacturers is lower than those from international. Model number
Year of manufacturing and purchase
Registration information: Information of registration like place, date, registration number etc.
Accessories installed
Net ex-showroom price of the car

2.Car Use:

Car can be put on business, personal or commercial use. The life expectancy of the car, which is the major factor in calculation of the insurance premium, is low in case of commercial vehicles than personal vehicles. Similarly, the total annual usage should be mentioned. The higher the annual kilometer usage, lower will be the life of the vehicle.

3.Owner and driver details:

The name, age, gender, place or location, marital status and address are different details required for car insurance. Researches have proved that young people are more prone to accidents than elder drivers. Again, male drivers are more aggressive while driving as compared to the female drivers.

4.Home ownership:

Owning a home has a direct connection with higher stability. Also, it acts as a kind of security to insurance companies. Thus, if you own a home, you may become eligible to pay a lower insurance premium.

5.Driving record:

New drivers have more inclination towards the risk of road accidents than experienced once. The past driving record which provides details of years of experience in driving and age of the driver affects car insurance premium.


The accidents and past records of insurance claims also affect insurance premium. You can get insurance even if you have been found guilty of an accident, however, it will increase your insurance premium. This is because your probability of car insurance Claim is higher. In such case, you may look for a car insurance Policy with cashless claims benefits.

7.Type of insurance

Insurance companies are very flexible in providing you choice of insurance cover. However, your insurance premium highly depends on your choice of protection. The insurance premium for Third Party Liability Insurance and personal insurance of the same car may be different for the same user.


These days, car insurance policy can be custom-made based on your requirement. You can now include personal benefits in third party liability cover. The benefits will vary from cashless claims to lump sum paybacks. The insurance premium will be calculated accordingly.


The total amount for which the car insurance policy is taken is also a big factor in determining insurance premium. Higher the coverage higher will be the premium and vise versa. Similarly, the Term of the car insurance policy is yet another important determinant.

Thus, insurance premium calculation involves considering all the above factors.

While people look for car insurance policies with low premium, they forget about checking the benefits. Having a detailed study of the above factors can help you get lower car insurance premium with various benefits.