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How to Calculate the Car Insurance Premium for New Car & Used Car?

Car insurance premium is calculated online these days with the help of computers and other digital equipment. In the starting days of insurance, the premium calculation was done manually and was given in writing. These days the digital equipment have taken over the manual calculations where you need to input the data of your car such as Make, Model, Manufactured date and other factors to get the premium. The car insurance premium calculators are equipped with the formulae and once the data is input, the premium is displayed on the screen.

How to Calculate the Car Insurance Premium for New Car and Used Car?

Car insurance rates for used cars and new cars can be calculated online and the details to be submitted for used cars are transfer of owner ship details apart from the basic details such as Car type, fuel used, place of registration, date of registration etc.

As we know, car insurance premium calculation has two sections namely own damage section and the third party section. The premium for the third party section is determined by the IRDA and constant across all the insurance companies. The own damage section rates are also decided by the Indian Motor Tariff and the insurance companies can decide the premium rates based on the tariff rates.

The first party car insurance is an agreement between the insured customer and the insurance company in which the insured pays premium and claims for any damage from the insurance company. The car insurance premium calculations are easy these days, and let us understand how the car insurance premium calculation is being done:-

Car Insurance Premium Calculation:

Factors New Car (Less than 1500cc) Renewal (Less than 1500cc)
Manufacturing Year 2020 2019
Ex-showroom price Rs. 5,00,000 Rs.5,50,000
Depreciation 5% 20%
IDV Rs.4,75,000 Rs.4,40,000
OD Premium Rate 1.560 % 1.650 %
OD Premium Rs.7,410 Rs.7,260
No Claim Bonus Discount 0% 20%
Total OD premium after discount Rs.7,410 Rs.5,808
Third party premium Rs.3,221 Rs.3,221
Compulsory PA Owner Driver Cover Rs.325 Rs.325
Total TP Premium Rs.3546 Rs.3546
Net Premium Rs.10,956 Rs.9,354
GST 18% Rs.1,972 Rs.1,684
Final Premium Rs. 12,929 Rs.11,038

Factors effecting Car Insurance Premium:

Below are factors which determine the car insurance premium calculation;

  1. Make & Model: The make and model of your car determines the premium charged by the insurance company. Some make models are charged higher premium due to the repair costs involved with that particular models. The cost of parts to be replaced or repaired is higher for some make of cars which results in higher premium.
  2. Cubic Capacity: The cubic capacity of the car also determines the premium. Higher the cubic capacity, higher would be the premium of the car. Cubic capacity is the size of the engine and the power produced by the engine. There are three classifications for the cubic capacity: Less than 1000cc, exceeding 1000cc and not exceeding 1500cc, exceeding 1500cc.
  3. No claim bonus: The No Claim Bonus is given to the drivers who do not make any claim in the previous years of insurance. The NCB bonus is given in 5 slabs and ranges from 0% to 50% fir each claim free year. The NCB discount is applied on the own damage premium before arriving at the final premium. Higher the NCB, lower would be the premium.
  4. Manufacturing Date/Registration Date: The Date of Manufacture or the Date of registration is taken for the premium calculation to determine the age of the vehicle. Some insurance companies take the manufacturing date for determining the age of the vehicle while some insurance companies take the registration date to determine the age of the vehicle.
  5. Fuel Type: The fuel used in the car also considered while calculation the premium for the car. In most of the cases the diesel cars are charged higher compared to the petrol cars. This is due to the loss ratio experienced by the insurance companies, the loss ratio of diesel cars being higher than that of the petrol cars.
  6. Zone: For the purpose of insurance, India is divided into 2 zones namely Zone A and Zone B. Zone A consists of the State capitals and Metropolitan cities while the Zone B consists of the other places excluding those in the Zone A. This is due to the experience that the cars in Zone A are more prone to accidents compared to that of the cars from Zone B.

Visit for your car insurance calculation premium and get the best car insurance premium quotes from the list of top general insurance companies at the best price.

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