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How Does A Car Insurance Premium Calculator Work

A car insurance premium calculator is an online tool or facility that allows you to calculate Car insurance premiums or get a quote from various insurance providers by simply adding a few details of the vehicle.

When you are looking to buy car insurance, you need to check the different types of car insurance coverages available in the market. Then you should ideally compare insurance plans between providers to narrow down on the most suitable cover for your specific car insurance policy needs.

Then in order to calculate the car insurance premium amount you just put a few details such as make, model/variant, vehicle registration number, RTO location, and four-wheeler’s purchase year. The process of calculating the premium before purchasing a car insurance policy will give you a fair idea of policy quotes from various insurance providers and eventually help you in making the right purchase decision.

How is the Car Insurance Premium Calculated?

The car insurance premium is calculated with a simple formula that can help you understand the car insurance premium calculation.

Premium = Own Damage Premium – (No claim bonus + discounts) + Liability Premium as Fixed by the IRDAI + Cost of Add-ons. 

The car insurance calculators available at neutral financial websites use this generic formula that gives you a premium quote closest to the amount you will have to pay while buying a policy from a specific insurer.

What are the several factors affecting your car insurance premium?

Here are the several factors which affect your car insurance premium.

  • The Insured Declared Value (IDV) of the car

At any given point, your car has some value. IDV decides the value of your vehicle at any given point of time under a comprehensive car insurance cover. Simply put, IDV is the maximum amount that you can claim for any loss or damage to the vehicle. It is one of the critical factors that greatly affect the premium.

  • The cubic capacity of the vehicle’s engine

The liability premium amount depends on the car’s engine power. The more the cubic capacity, the more will be the premium. The liability premium is often fixed by the insurer. It is the minimum statutory premium to be paid as fixed by IRDAI (Insurance Regulatory and Development Authority of India).

  • Car’s manufacturing year

Older cars have lower IDV values hence comparatively lesser premium than new vehicles with relatively higher IDV values.

  • The area of registration of the vehicle

Since the cities have a high density of traffic, you will have to shell out a higher amount to get your car insured there.

Moreover, the rate of thefts and robberies is high in urban areas which directly impacts the premium of car insurance.

  • The No Claim Bonus (NCB) accrued under the policy

To reward policyholders for being responsible drivers and encourage buying car insurance policy insurance companies to offer the benefit of a No Claim Bonus. If you haven’t made a claim in your previous policy year, you become entitled to an NCB discount. If you have an NCB component in your policy, you can save up to 50% on your own damage (OD) premium.

How to use Car Insurance Calculator?

Calculating a car insurance premium is quite easy. Once you land on the car insurance premium calculator page, fill in the mandatory details of your vehicle and insurance product type (comprehensive/liability).

Take a look at the below steps to calculate car insurance premiums.

  • Fill in the details of your Car insurance such as make & model
  • Enter ex-showroom price, city, and purchase year of the vehicle
  • Select and submit the details of any past year claim made of your car will be displayed
  •  Insured Declared Value and Premium quote of your Car will be shown
  • Select the plan (Comprehensive/Third Party) as per your requirement
  • Select Add-on covers for your car insurance like Zero Depreciation, Return to Invoice, Gear & Engine Protection, and more.
  • You will now see your final car insurance premium calculated.  

Benefits of Car Insurance Premium Calculator

  • The car insurance premium calculator is easy and simple to use, it provides results in a few minutes.
  • You can use the calculator at the convenience of your home and benefit from a hassle-free and paperless policy purchase experience online.
  • The insurance calculator is not influenced by any external factors such as commission or insurance agents and gives you proper values based on the technical parameters.  
  • On the calculator tool, you can change the variables of coverage and see how the premium changes accordingly. 
  • With the insurance calculator tool, you can educate yourself on the various types of coverages, premiums, and custom policy plans and hence help yourself in making the best decision at the time of buying a policy.

A car insurance premium calculator is simply an online tool available free of cost on websites of insurance providers or aggregators. It helps you to get a policy quote from different insurance providers along with the amount of premium you are required to pay. Make an informed decision before buying a car insurance policy and make use of the facilities of the insurance calculator and compare quotes online to get the best insurance deal.

For more information, visit the Kotak General Insurance website

Marketvein Staff
Marketvein Staff
Born libra, likes to lead from the front. Digital Marketing & Technology is his strength. He has pursued engineering. Travelling to new places & writing is his idea of fun. In his free time (if he gets some that is), he is seen donning the chef's hat at home.
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