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Have you ever thought how is your motor insurance premium calculated? Well, the insurance company takes into account multiple factors ranging from age of the vehicle to fuel type while determining the premium amount of motor insurance policy.
Here are some of the common factors considered for calculating your motor insurance premium:
Vehicle model
Vehicles with higher engine capacity are charged higher premiums compared to vehicles with lower capacity. Similarly, for vintage and stylized cars, the premium rates will be higher compared with regular models. You need to provide necessary vehicle details while filling the form so that insurer can work out the premium based on car specifications.
Add-ons
The motor insurance policy comes with several riders such as zero depreciation cover, engine protection and roadside assistance cover, among others. If you opt for such add-ons the premium rates of your motor insurance policy will increase. Go for riders only if it suits your requirements.
Type of cover
If you opt just for a third-party insurance cover, which is mandatory by law, your insurance policy will not cost much. However, if you opt for a comprehensive plan, which includes both own damage and third party insurance, a higher premium amount will be charged. It is advisable to go for comprehensive coverage for the wider coverage of your vehicle.
Insured Declared Value
This is the value of your vehicle which is paid in case of theft or total loss of your vehicle. The higher your IDV is, the higher will be your premium rate.
Deductibles
Deductible is a portion of money you need to pay from your own pocket while making a claim. In this case, you have to bear part of the repair cost as the insurance company will not pay out the entire claim amount.
No claim bonus
For every claimless year your insurance company gives you a discount on premium which is known as NCB. You can earn up to 20-50% discount by the end of the 6th year of the policy term. Therefore, before going for minor repairs just check how much NCB you will lose if you make a claim.