Factors affecting your motor insurance premiums

Motor insurance is something that none of us can avoid as it is mandatory in nature. And the motor premium is fixed across the various companies. On second thoughts, is it fixed across insurers? Is it fixed for owners of the same type of cars? No, there are certain factors that decide the premium that each one of us ends up paying for our vehicle.

1. Type of Policy: - The first and the foremost factor is the type of motor policy you have opted for. Your policy can be Third Party Liability only policy which is mandatory and cheapest, and covers the owners/drivers liability arising towards third party from the use of the vehicle. The second type of policy would be package policy where third party liability as well as your own damages would be covered. The third option is Nil depreciation policy where third party liability, own damages cost and depreciation costs are covered under the policy. This is the more expensive than Package policy. The latest type of policy is Return to Invoice policy where the invoice cost would be settled to the owner in the case of total loss of the vehicle. Understandably this is the most expensive of all covers.
2. The Vehicle: - The type, make, model, and fuel type and so on is the second most important deciding factor when it comes to the premium. Along with these, if you want to cover the accessories also, then additional premium would be charged. Lifetime membership into the Automobile Club can earn you discounts. So can fitting of anti-theft theft devices.
3. IDV : - The third parameter that decides the cost of your insurance is the Insured Declared Value (IDV).IDV is the agreed value of the vehicle that is taken for the purpose of insurance. Higher the IDV higher would be the premium. Usually insurance companies reduce the IDV by approximately 10% every year. However, by paying additional premium, the insurance company may agree not to reduce the IDV.
4. Location: - The geographical location of the usage is the fourth factor that influences your vehicle premium. Both third party as well as own damages rates vary from metro to non-metros. Cities are divided into different Tiers like Tier I, II, Iii and so on. Tier I would be metros where traffic is higher, chances of claim is higher and hence the premium charged would be higher.
5. Deductible: - The fifth parameter that decides your premium would be your voluntary deductible. Every motor policy has a compulsory deductible amount which varies from the type of vehicle to vehicle. The policy holder has the option of increasing the amount of deductible which will reduce the premium that he has to pay.
6. Driver Specific: - Driver information and history would be the next parameter for premium calculation. The No Claim Bonus that insurers give is for the driver and not for the vehicle. So depending upon your driving skill and care, you can increase your NCB and reduce your premium payable. There are several private sector insurers who give discounts based on age and marital status. Of late, usage pattern of vehicle-that is the kilometers it runs is also considered by some insurers to reduce the premium payable.