17 August, 2016
Premium payments for automobile insurance can put quite a dent in your finances. Driving uninsured however, is neither an option nor is it advisable. You can analyze the different factors that affect the premium on your policy to minimize expenses.
Factors that affect the premium are determined by the risks that need to be underwritten, as perceived by the insurance company. These risks can be classified as below:
1. Vehicular Risks
Factors, such as the model, make, and the cubic capacity of the vehicle play an important role in determining car insurance premium. Sports utility vehicles and commercial automobiles entail higher premiums, because the payouts on claims received for these are higher. In addition, diesel vehicles cost 10 to 15 percent more than petrol cars.
While renewing the policy, you need to determine the insured declared value (IDV), which is a working of the age of the car and its depreciation, which affects the premium. Automobiles that are less than 5 years old are depreciated on the ex-showroom price for calculating the IDV. Vehicles that have been used for over 5 years consider the market price as the IDV at the time of insurance renewal.
2. Location Risks
These risks are associated with the location where the vehicle is registered. People living in urban areas need to pay higher premiums on their car insurance plan. Additionally, owners residing near highways and densely populated regions need to incur higher premium costs. Moreover, if your location has a high rate of thefts or vandalism, the insurance premium will increase.
3. Claims Related History
Vehicles that have been involved in an accident will attract higher premiums. Additionally, if you make any claim during the year, your premium for the car insurance policy will increase at the time of renewal.
4. Driver Related Risks
Insurers also consider the age and profession of the drivers to be included in a policy, while calculating the premium. If you have a blotched driving history or are a new driver, you will need to pay higher premiums. Multiple drivers to be covered under the same policy also increase the premium rates.
To know more about these risks and to enjoy discounts on your auto insurance policy, check out Royal Sundaram’s Car Shield Plan. There are several benefits such as a no-claims bonus and free roadside assistance, along with other features and discounts.
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