Car insurance in India
is mandatory for every vehicle, which is running on the roads. Generally, all
new cars arrive with an auto
insurance policy, which is valid for about a year and then needs to be renewed.
There are a number of government and private firms in the nation that deal in
auto insurance for each and every model. All the buyers of the nation are aware
of the fact that after
availing an auto
insurance policy, they have to deposit a certain amount of premium each year.
This car insurance premium ensures that the policy is continued without any
problems. However, most of the people will be unaware on what basis is this
premium calculated by the concerned insurer.
There are basically two
types of car insurance in India – a third party insurance and a comprehensive
package. Former covers damages for a third party, which has undergone injuries
in case of any collision, while latter is dedicated to covering damages for the
insured vehicle as well as the liability (third party).
The premium for car
insurance in India is calculated on the basis of Insured Declared Value (IDV)
of the specific model, No Claim Bonus (NCB) and any other discount/offer
included in the scheme. Interestingly, all these 3 factors are used to
calculate the comprehensive premium/package and are not applicable for the
liability or third party. The Insurance Regulatory and Development Authority
(IRDA) decide the insurance premium for liability and may change it accordingly.
To calculate the car
insurance premium, first the IDV of the model is examined by the insurer.
The IDV is based on the ex-showroom of the car and changes annually as per the
depreciation rate of a certain model. This depreciation rate for cars is as
follows:
·
5 percent for a car not exceeding 6 months
·
15 percent for a car exceeding 6 months but less than 1 year old
·
20 percent for a car exceeding 1 year but less than 2 years old
·
30 percent for a car exceeding 2 years but less than 3 years old
·
40 percent for a car exceeding 3 years but less than 4 years old
·
50 percent for a car exceeding 4 years but less than 5 years old
For
the used cars, which have exceeded 5 years, the insurance premium is calculated
on a mutual consent between the insured and the insurer. After calculating the
IDV, the NCB of the car is calculated on the basis of claims made by the
insured person in the previous year.
A
person is entitled to a No Claim Bonus if he/she has not made any single claim
in the previous year of the auto insurance policy. In case, the NCB gets
accumulated for more than a year, chances are that a person might avail a
staggering 50 percent discount on the overall premium amount.
There
are also few other discounts and offers an insured buyer is entitled to apart
from the NCB. These benefits are given to a car owner in case he/she integrates
the vehicle with an anti-theft device or obtains a membership of Automobile
Association of India (AAI) or opts for a voluntary deductible.
Also,
if there are any additional accessories in the car that are not involved in the
selling price or catalogue of the manufacturer, the premium of such features
will be calculated separately. After maintaining and calculating all these
records, the car insurance premium for each model gets generated every year.
[Source: http://www.cartrade.com/blog/2014/car-finance/how-is-the-car-insurance-premium-calculated-in-india-665.html]
hey thanks for sharing this informative blog it seems very helpful, i was looking for same kind of content about car insurance
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