How do the make and model of a car impact the policy premium?

How do the make and model of a car impact the policy premium?

Written by Deepak Bhagat, In Cars, Published On
March 4, 2023


The make and model of a car impact the policy premium in the following ways. Apart from it, there are a few other parameters that can impact the policy premium. Here are the details about these parameters and how they can influence the premiums. Keeping these in mind will help you choose smartly when it comes to buying a car or car insurance policy. Irrespective of the parameters, it is essential that you buy a policy for your car.

Should I buy a sedan or an SUV? Should I opt for a petrol engine or a diesel engine?

These and many more are some of the most common questions that car owners must ponder over before deciding on a car. Did you know, your car insurance premium depends on a lot of these factors?

Buying a car of your choice is an aspiration that a lot of us have. It is no wonder, then, that a considerable amount of thought process goes into the same. Car owners end up choosing a car that fits their budget, family needs, usage pattern, and so on.

The process is no different for insurance providers as well. When you buy car insurance online, insurance providers consider quite a few parameters to decide the premium. Here are some of the most common ones.

What is the make and model of a car?

policy premium

The model of a car refers to the product that a car manufacturer makes. For example, Harrier is a model that is offered by Tata Motors. In this case, Tata Motors is the make and Harrier is the model. At times, the year of the introduction of the car is also used as the name of the car.

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How does the make and model of a car make an impact on the policy premium?

When you are buying a new car, it might be a good idea to spend some time researching the premium of the car. An advantage of buying car insurance online is that you can easily find out the car insurance premium of the car that you intend to buy. Here is how the make and model impact its premium.

  • Engine capacity

The engine capacity of your car plays a vital role in deciding the policy premium. The engine capacity comes in handy while deciding the policy premium of third-party liability policy. The IRDAI, or the insurance regulatory and development authority of India, decides the premium of third-party liability policies. And they consider the engine capacity for the same.

The policy premium for a car with an engine capacity of 1000cc is Rs. 2,055. The policy premium for a car whose engine capacity is between 1000cc and 1500 cc is Rs. 3,132. And the policy premium of a car whose engine capacity is above 1500cc is Rs. 8,630.

Thus, the make and model of your car can influence the policy premium. One model of a car might have a 1.5 litre engine, while another model might have a 2 litre engine. The 500cc difference can lead to a significant rise in the policy premium.

  • Cost of vehicle

The cost of a vehicle has a direct impact on the policy premium. Insurance companies consider the IDV of the car to decide the policy premium. For a new car, the IDV of the car is the sticker price that you buy it from the showroom for.

When it comes to the make and model, an entry-level variant of the car will most likely have a lower price tag on it. On the other hand, the top-end variant of the car is more likely to have a higher price tag.

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A car that is more expensive, is more likely to bump up the car insurance premium. Also, a car that is more expensive will cost more to repair or replace some of its parts.

  • Type of car

If you are confused between a sedan and an SUV, it might be a good idea to check car insurance online to get quotes for both cars. SUVs, in general, attract a higher insurance premium as compared to sedans.

Also, SUVs are more likely to get into an accident than sedans. This is a leading factor for the insurance premium of an SUV being higher than a sedan. Before you decide on a car, these are some of the factors that you must consider.

Other factors influencing the premium of a car

policy premium

Apart from the make and model of the car, a few other factors also influence the car insurance premium. Here are some of these.

  • Type of policy

You can choose from a third-party liability policy, a comprehensive policy or pay as you drive policy for your car. Based on the type of policy that you opt for, the premium will vary accordingly. For example, a third-party liability is the bare minimum policy and is a statutory requirement. Thus, the policy premiums are low. A comprehensive plan, on the other hand, offers better coverage albeit a higher premium.

  • Location

Car owners that live in an area with a higher crime rate are more likely to pay a higher policy premium. Similarly, the policy premium of a car in a tier-1 city will mostly be higher than a car in a tier-2 or tier-3 city.

The vehicle population in tier-2 or tier-3 cities is usually lower than that of a tier-1 city. And a lower vehicle population translates to a lower risk of accidents, which can result in a lower policy premium.

  • Voluntary deductible

You will end up paying a deductible every time you claim a policy. However, you can opt for a voluntary deductible. It is the amount that you agree to pay, every time you claim the policy. A higher deductible can result in a lower policy premium.

  • Add-ons

Choosing an add-on for your car insurance policy is one of the more intelligent ways of improving policy coverage. Some of the popular add-ons include zero depreciation cover, engine protection cover, roadside assistance cover, etc. However, you will need to pay a small premium to get an add-on. Thereby increasing the premium of the policy.

  • Buying policy online

When you decide to buy car insurance online, you are more likely to save money on the policy premium. Purchasing a policy online provides you with the option to compare different policies and insurance providers. And choose a policy that fits your needs and wallet.

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Buying car insurance online is the most preferred mode of buying a policy. If you are still deciding on a car and its model, it can be a good exercise to check the policy premium. Above are the details about how the make and model of a car impact the policy premium. You can decide on a car, keeping the above parameters in mind. Since a car insurance policy and its renewal is a lifelong exercise, a smart decision will help you save considerably.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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