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Car Insurance Price List Calculation

Car insurance premium calculation has two components namely Third party (TP) premium and Own Damage (OD) premium. While the Third party premium rates are fixed by the IRDA, the own damage premium rates are fixed by the insurance companies. The third party premium rates are subject to change each year depending on the claim amount settled and other factors which are taken into consideration by the IRDA. The car insurance price list contains both the third party premium and the own damage premium or 1st party premium of your car.

The car insurance price list in India is subject to change each year depending on the third party premium as well as the own damage premium. Even though the 1st party premium is constant there might be changes in the third party premium which changes the overall price list of the car insurance premium.

1. Third party Car Insurance Price List

The third party rates of car insurance are fixed by the Insurance Regulatory and Development Authority of India based on the Gross Written Premium collected and the Claims settled for that particular year and the increase of third party premium rates are subject to the final decision taken by the IRDA.

The third party price list for the year 2020-21 is proposed to be changes and the new price list of third party car insurance is as below:

Private Cars Existing Rates FY 2019-20 Proposed Rates
FY2020-21
Not exceeding 1000cc 2,072 2,182
Exceeding 1000cc but not exceeding 1500cc  3,221 3,383
Exceeding 1500cc 7,890 7,890

It can be observed from the above table that the proposed increase in the third party price list for car insurance premium is not more than 5% of the existing premium rates. The 5% change in the proposed third party premium is due to the increase in the claim settlement ratio. The claims in case of third party accidents are taken to the honourable court where the court awards the claim amount depending on the earning capacity of the individual, age of the individual etc. The insurance companies are bound to pay the claim amount awarded by the honourable courts and hence the major portion of the premium collected by the insurance companies ends up in the third party claim settlement.

2. Own Damage Car Insurance Price List:

As discussed above the other component used in the premium calculation of car insurance is the own damage premium. The own damage premium is determined by the insurance companies and differs from one company to the other. The own damage premium  in car insurance rates are calculated on the basis of Insured Declared Value, Zone of operation and the cubic capacity of the car.

The own damage premium price list in car insurance is determined by the below formula which is mentioned in the Indian Motor Tariff:

Age of the Car Zone B Zone A
Not exceeding 1000cc Exceeding 1000cc and not exceeding 1500cc Exceeding 1500cc Not exceeding 1000cc Exceeding 1000cc and not exceeding 1500cc Exceeding 1500cc
Not exceeding 5 years 3.039% On IDV 3.191% on IDV 3.343% On IDV 3.127% On IDV 3.283% On IDV 3.440% On IDV
Exceeding 5 years but not exceeding 10 years 3.191% ON IDV 3.351%ON IDV 3.510% ON IDV 3.283% ON IDV 3.447% ON IDV 3.612% ON IDV
Exceeding 10 years 3.267% ON IDV 3.430% ON IDV 3.594% ON IDV 3.362% ON IDV 3.529% ON IDV 3.698% ON IDV

From the above table, the own damage premium can be calculated. Insurance companies are bound to operate with these rates and are not allowed to charge anywhere more than these rates. Almost all the insurance companies charge only half of these rates to math with the competition in the Indian market.

For the exact car insurance price list in India please visit www.policybachat.com and get the full car insurance price list for your car from all the top insurance companies.

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