Does the Value of Car Affect Insurance Premiums?

What is Car Insurance Premium?

If you own a car, you must be mindful that the Motor Vehicles Act, 1988 mandates every car in India to be covered under a valid car policy policy. In India, you can either buy a third base party car policy or comprehensive insurance for your cable car. Third party car insurance covers any third gear party liabilities arising out of your car due to causing injuries or property damages to third parties. comprehensive car indemnity provides broader coverage by covering your one-third party liabilities and damages sustained by your car in a fire, accident, manmade calamities, natural disasters or larceny .
Although you have the freedom to buy the best car indemnity as per your suitability, you must ensure that it includes third party indemnity coverage. This is because a third party cover is necessary to abide by the centrifugal laws of the nation. You can compare car insurance from respective drive insurers online to choose the best car indemnity policy as per your budget and needs .
You can not buy a cable car insurance policy without paying a bounty. Car indemnity premium refers to the come that you pay to a motor indemnity company to ensure fiscal protection against any personnel casualty or damages to your car. It is the monetary value of the policy policy that you buy for your car. The premium for a car indemnity policy is determined based on several factors. The value of the car is one of the biggest factors that determine the agio price of a car insurance policy. It affects how much you will pay for your car policy policy.

How the Value of a Car Affects the Car Insurance Premium?

The value of a cable car immediately impacts the premium of a car policy policy. The higher is the value of your car, the higher will be the monetary value of your cable car policy policy. This happens because of two reasons. First, high valued cars come with expensive car parts. If your car gets damaged, the price of repairing or replacing the parts of a car will be higher than that of lower-priced cars. As a resultant role, your motor insurance company will have to shell out more money to repair your car. consequently, insurers charge higher car insurance premiums for expensive cars as compared to low-cost cars. For model, your insurance company will have to pay more money to repair an SUV than a hatchback cable car as the erstwhile is more expensive .
Second, high valued or expensive cars catch everyone ’ s attention very easily. The likelihood of your high-end car attracting the attention of criminals or thieves and getting stolen is more than that of a dim-witted and low-cost car. therefore, your insurance company will have to pay more money to replace an expensive cable car than an low-cost car. Since expensive cars are a greater liability for a motor insurance company, they charge a higher premium for indemnity of such cars .
The value of your car can besides impact the type of car indemnity that you can buy. Although the motor laws lone mandate for a one-third party indemnity covering for every cable car, some motor insurers may ask you to opt for a comprehensive car indemnity policy if you have a high valued car. The insurance company may not offer one-third party car insurance for expensive cars. This may happen because any loss or damages caused to the cable car is not covered under a third party car indemnity policy .

How Does Motor Insurance Companies Determine the Value of a Car?

When you buy the best car insurance for your vehicle, the centrifugal insurance ship’s company determines the prize of your car to estimate the IDV. The IDV or Insured Declared Value refers to the maximal claim measure that the insurance ship’s company will pay to you in shell you raise a car indemnity claim. The IDV is calculated by subtracting the depreciating value of your car from the current prize of the car .
The value of a car is determined by considering its current commercialize value. Insurers do not consider the bill value of a cable car as the value of a car keeps changing over time. To determine the current value of a car, the insurers consider the market value of a car and subtract depreciation from it to arrive at the IDV .
If your car gets completely destroyed in an accident and is beyond repairs, your insurance company will write-off your cable car. As a consequence, your insurance company will pay you the full IDV decided at the time of buying the car policy policy. The higher the IDV of the car, the higher will be the claim sum that you will receive from your insurance company. frankincense, it is significant to not settle for a lower IDV at the time of buying indemnity for your car. You can compare car insurance plans online before policy leverage and buy a policy that offers you an IDV close to the stream market value of your car .
Besides, you can besides buy zero disparagement accessory cover to ensure a higher IDV. The zero depreciation breed ensures that your drive insurance company does not subtract the depreciating rate of your car while estimating the IDV of your car. Since it is an accessory cover, you will have to pay a slenderly higher car indemnity bounty to buy this shroud. furthermore, this addition cover is merely available for cars that are not older than five years .

What Happens to Car Insurance Premium if You Upgrade to a Higher Valued Car?

If you upgrade your car to a high respect car, your car policy premium will increase. The premium that you were paying until then was for the old car which was for a lower value than the new car. When you switch to an expensive car, the motor insurance caller will charge you a premium based on the liabilities posed by the newfangled car. Since high valued cars come with expensive car parts and pose a greater indebtedness on the insurance company, the motor indemnity party will ask you to pay a higher premium in switch over for the car policy coverage.

When you buy a newly car, you can get the car indemnity policy for your previous car transferred to your raw cable car, provided you are no long going to use the honest-to-god car. You need to inform your insurance company and submit the necessitate documents to get your existing car indemnity transferred to your new car. however, you will be required to pay the deviation in the premium of the old car and the new cable car at the clock time of transfer .
Make indisputable to inform your centrifugal indemnity company a soon as you upgrade your cable car and get the car insurance policy transferred. If you fail to do thus, you will not be able to raise a cable car insurance claim if your sword raw car suffers from any wrong. even the best car indemnity will not cover the damages of your newfangled car if it has not been transferred from your old car to the new cable car .

Other Factors that Affect a Car Insurance Premium

apart from the rate of a car, there are several other factors that a motor insurance company considers to determine the bounty for a car indemnity policy. Take a front at some of the factors that affect car indemnity premiums :

  • Age of the Car – The value of a car decreases as the vehicle gets older. As a result, the car insurance premium reduces as the age of a car increases.
  • Engine Capacity of the Car – A car with a higher engine cubic capacity may be more expensive to repair and may have expensive engine spare parts. Therefore, the premium of a car insurance policy is higher for a car with a higher engine cubic capacity.
  • Make & Model of the Car – The make and model of a car also impact car insurance premium. The premiums are higher for higher-end cars as such cars are more expensive.
  • Service Location of the Car – The geographic location where you use your car affects your car insurance premiums. You will have to pay a higher premium if your car is used at a place which is accident-prone or unsafe.
  • Type of Car Insurance Cover – Third party insurance provides lesser coverage than a comprehensive car insurance policy. Hence, you will have to pay a higher car insurance premium if you buy comprehensive insurance instead of the third party insurance policy.
  • Safety Features of the Car – Cars with safety features reduce the risk of the vehicle getting stolen. As a result, cars with more safety features will be offered lower car insurance premiums than cars without any safety devices installed.

In a Nutshell
Buying a high-end expensive car is no less than a dream for many people. But expensive cars besides lead to higher car indemnity premiums as the value of such cars is higher. Therefore, you must compare car insurance plans to find the best cable car indemnity for your fomite that is not only low-cost amongst the available options but besides offers sufficient IDV .

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