Why did the premium amount change? How do insurers calculate car insurance renewal premiums? Certain factors help determine the renewal premium. These are some of the most important ones-
- IDV (Insured Declared Value): The IDV or Insured Declared Value is the maximum amount your insurer will pay in case if your car is totalled or lost. With time, the price of your car falls. The insurer also considers this depreciation for calculating the IDV. Lower the IDV is, lower is the insurance premium.
- NCB (No Claim Bonus): If you have not filed any claims in the past year, you are entitled to receive NCB or No Claim Bonus. This is a form of premium discount for timely policy renewal. In the 1st claim-free year, the NCB is 20%. It can rise to 50% in the 5th claim-free year. So, if you do have NCB, it will result in a lower renewal premium.
- Voluntary Deductible: You can change the voluntary deductible at the time of purchasing or renewing car insurance. If at the time of renewal, you have selected a higher voluntary deductible, this can reduce the premium amount. But note that higher voluntary deductible will require you to pay more money from your pocket in case if your car is damaged.
- Personal Attributes: The insurer considers many policyholder attributes for calculating renewal premiums. For instance, if you had multiple accidents and claims in the past year or shifted to another location which comes under a different RTO, the renewal premium could be higher.
- Installation of Anti-Theft Device or Automobile Association Membership: If you have recently installed an ARAI authorised anti-theft device in your car, it can help in reducing the renewal premium. Also, if you have joined a certified car body like the Automobile Association of India, the renewal premiums can be lower.
As you can see, several factors are considered by the insurer for calculating the renewal premiums. Before making the purchase, you can use a car insurance renewal premium calculator to know how much premium you will be paying beforehand.
You can then compare quotes of multiple insurers and go with one that offers the best value for your money.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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