Owning a car is necessary in today’s world, and when you purchase your dream car, protecting your investment through a car insurance policy is a prudent choice. Buying a comprehensive car insurance policy will provide financial security for your vehicle in case of unexpected accidents and minor mishaps on the road. 

If you plan to buy car insurance, you must pay a premium. You can use an online car insurance premium calculator on most insurer websites to calculate this premium. 

Keep reading to learn the formula for car insurance and how to use an online car insurance premium calculator.

Calculation of Car Insurance Premium 

If you want to find your premium amount quickly and hassle-free, using an online car insurance calculator is the best way. The simple formula below will help you understand the car insurance premium calculation.

Premium = Own damage premium – (No claim bonus + discounts) + Liability Premium as fixed by the IRDAI + Cost of Add-ons.

How Can You Use a Car Insurance Calculator Online? 

An online car insurance calculator enables you to calculate the premium quickly while also helping you to compare different insurance policies available by different providers easily. This comparison helps you to evaluate the options available in the market and choose a plan that meets your requirements in the best possible manner.  

You can use an online car insurance calculator by following the easy steps given below:

 Step:1 Select your car’s model, make, variant, registration date, and the registered city

 Step 2: Select the ‘Get Quote’ option and choose your plan

 Step 3: Choose a plan as per your requirements (third party liability or a comprehensive insurance policy)

 Step 4: Enter your last insurance policy details – expiry date, claims made and no claim bonus earned.

 Step 5: Click on the ‘Calculate’ option

 Step 6: Your car’s insured declared value and estimated premium will be displayed on the screen.  

Factors That Affect the Car Insurance Premium

The key factors that can affect your car insurance premium are:

1) Car Make and Model: The higher the cost of the car, the higher the premium.

2) Policy Coverage: The premium varies according to the plan you choose. Generally, comprehensive insurance policy premiums are higher than third-party cover. 

3) Insured Declared Value (IDV): IDV is the approximate market value of your car. When you choose a comprehensive policy, the insurance company will pay the IDV amount in case of total loss or damage. Therefore, higher IDV leads to higher premiums.

4) No Claim Bonus (NCB): The NCB is a discount that a policyholder gets for every claim-free year, and it is retained even when you switch insurance companies. 

5) Fuel Type – A car fitted with CNG will have a higher premium than the cars that run on petrol or diesel.

6) Add-Ons: When you select additional benefits like Engine protection, Zero depreciation, or Roadside Assistance, they come at an extra cost, increasing the car insurance premium. 

7) Discounts: Insurance providers provide discounts for different reasons, such as renewing a policy before expiry or being a Government employee. You can use them to enhance your coverage or save on your premiums.

8) Car Manufacture Year: Older cars have a low Insured Declared Value (IDV), which lowers the premium amount.

Essential Tips to Reduce Car Insurance Premium

The tips can help you reduce your car insurance premium amount.

1) Renew Your Policy on Time: Renewing your policy will not only help you save money, but if you renew your policy late, you may lose the NCB and have to pay a higher premium for your next policy.

2) Transfer your NCB: You can transfer your No-Claim Bonus (NCB) to your new car. This will give you a discount on your new car insurance premium.

3) Avoid Car Modifications: Car modifications increase a car’s value, increasing its insurance premium.

4) Buy Car Insurance Online: When you buy car insurance online, you can compare quotes from different insurers and find the best deal. This will also allow you to get the best car insurance premium quotes. 

5) Install an Anti-Theft Device: Installing anti-theft devices on your car can significantly reduce your premium for joining the Automobile Association of India (AAI). 

Final Words

The car insurance premium amount depends on the different factors explained above. Using an online car insurance premium calculator provides you with a convenient way of calculating your premium in a quick and hassle-free manner. This method also allows you to compare different insurance policies online and select the one that best meets your requirements.

The post A Guide on How to Calculate Car Insurance Premium Online? appeared first on My Car Heaven.