When buying a motor vehicle, insurance is additional compliance apart from registering your vehicle. This is mandatory as per the Motor Vehicles Act and vehicle owners cannot register a vehicle in the absence of one. But apart from a legal requirement, vehicle insurance is essential from the protection it offers against damages—damages due to accidents that not just injure a third person or result in property damage, but also require repairs to your vehicle. Hence, an insurance cover must not be skipped.
While purchasing an insurance cover, you might come across myriad insurance plans. Not all of them might be the right fit for you. So, it is crucial to buy a policy that checks all your coverage requirement while meeting the legal requirements too. Also, the premium is a crucial factor for most buyers. Whether you are buying the motor insurance online or offline, it is one factor that is critical in finalising on the policy purchase. Here’s when it becomes important to know what factors impact the price. This article aims to elaborate on the different elements impacting price. Let’s have a look:
Insured Declared Value
Insured declared value or IDV is one of the key determinants that decides the premium of your insurance policy. It is also the maximum amount which the insurance company compensates in the event of a complete damage, also known as the total loss, of your vehicle. Since such IDV is the what the insurance company pays as the maximum compensation, it impacts the premium directly. *
Type of coverage
Other than insured declared value of your vehicle, the type of coverage is another crucial factor that impacts the vehicle insurance online payment. Vehicle insurance plans are broadly classified in two types—a third-party policy and a comprehensive plan. Third-party plans are designed to offer coverage for liabilities arising during an accident. It can be either due to injury to a person or damage to their property. In both these situations, you as a vehicle owner have the liability to compensate for losses and that’s when a third-party plan comes to the rescue. For such reason, a third-party policy is also referred to as a liability-only policy.
Alternatively, you can also buy a comprehensive policy that covers the repair costs for your vehicle in addition to such third-party legal liabilities. As the coverage is wider for such comprehensive plans, it is naturally priced higher than such a liability-only policy. Further, the liability plan is a regulatory mandate and hence its premiums are governed by the Insurance Regulatory and Development Authority of India (IRDAI). You can visit the official website of IRDAI for further details. *
Add-ons are insurance covers that can be purchased with a comprehensive plan to enhance its scope. Since these add-ons are optional in nature, it has a direct impact on the premium computation. However, it must not be overlooked as the benefits these add-ons offer in terms of coverage is far greater than the price charged for it. Considering the different add-ons, a motor insurance calculator can be a handy tool to balance the features and its price. *
Where your vehicle is registered also determines the premium of your insurance policy. Motor insurance premiums are classified in two zones—Zone A comprising of eight metro regions like Kolkata, Chennai, New Delhi, Mumbai, Bengaluru, Hyderabad, Pune and Ahmedabad and the rest of the country in Zone B. Thus, depending where the vehicle is registered, the premium is levied. *
* Standard T&C Apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.