Insurance for cars and all other vehicles is a mandatory requirement. One should know that premium is function of many aspects of the vehicle and those are listed below:
Insured Declared Value (IDV): IDV is essentially the resale value of the car. For a brand new car, this is equal to the Purchase Price and with every passing year, it depreciates. Usually, depreciation factor of 10% is used to calculate IDV on written down basis (WDV). It may increase / decrease as well depending upon make of the vehicle.
Vehicle Make and Variant: The manufacturer of vehicle, its variant – diesel / petrol, age of the vehicle etc. are important aspects while determining the premium. The vehicles registered as commercial vehicle rare charged higher premium. The underline fact is that any aspect which has higher risk attached to it will increase the premium.
No Claim Bonus: Insurance companies reward consumers where they have not made any claim during the year in the form of no claim bonus. The NCB ranges from 10% to 50% and it increases with every claim free year.
Features of the Plan: There are different plans being offered by the insurance companies in terms of its coverage’s and features. The features may include Zero Dep benefit, Road side assistance, Engine Protection, Key Cover, Baggage Cover, Personal Accident Cover for Drive and passenger, Theft Cover, Consumable Cover, Conveyance Allowance etc.
A Car insurance premium is typically is combination of premium on following accounts:
Own Damage (OD): This protects the insured against the financial damage on account of damage to own car due to accident.
Third Party Liability Coverage: This protects the insured for any liability arising to a 3rd party on account of own fault. It covers for damage / injury caused to another person or property. Third Party Liability Cover is mandatory under Motor Vehicle registration Act while OD cover is optional in nature though it not advised at all.