Insurance premium has become a day-to-day affair that we hardly give its due share of concern. When you are mulling to buy that dream car of yours, insurance premium is the last thing on the mind. But very few people know that the amount of premium they pay as insurance vary markedly based on various factors such as manufacturing year, model, fuel options etc. Unsuspected items like safety device, accessories and the fuel tank can also play mischief with the premium amount. Such differences in the amount can fluctuate anywhere between 2.5 to 15 percent. Further there are those cars which the insurers are unwilling to cover. Chief among them are Toyota Qualis, Chevrolet Tavera and Tata Sumo. This is attributed to the fact that such vehicles are often used for commercial purposes albeit registered as a private vehicle.
So here we are with a list of must-consider factors.
Devices for safety: Insurers prefer cars with steering-wheel and gear locks, sensors, and air bags, life-saving and anti-theft devices. These features are needed to be authorized by the ARAI in order to be considered by the insurers. If the car has been equipped with some advanced anti-theft system the lower premium act comes in to play. All Maruti models which brandish the iCAT system command a premium which is 10% lower than those which do not. Other parameters of interest to the insurers is the resale value of the car. SUVs are in demand due to the high resale value they command and also these are used across the country as a public transport. An example of this is the 20% higher insurance premium for all SUVs in the north of the country.
Hybrid or Gasoline: Insurance premium of cars that run on petrol alone is a tad lower than those which run on CNG (compressed natural gas), LPG (liquefied petroleum gas) or Diesel. The rationale behind such premiums is that the intent of a person who owns a diesel vehicle to use the car for greater mileage and wants to keep the running cost down.
The premium on petrol cars are less than 10-15 percent from those of the diesel cars. Similarly the premium demanded for LPG and CNG vehicles are also higher when compared to petrol cars. Not only the type of fuel, on which the car runs, determines the premium but also the material of the fuel tank is equally important. If the fuel tank of the vehicle is made up of fiber the insurance premium gets a bit higher by 3-4 percent.
Spare parts: Expensive spare parts invite a elevated premium albeit the price of the cars may be low. Say for example the cost of repairing of many imported models is on the upper side. On the contrary low-cost cars have more localized components and hence are pegged at 10-20 percent lower premium.
Accessories: Higher premium is attracted for those cars which are been equipped by the user with high end lights and audio-systems.
Owners Profile: While determining the premium of insurance, even the lifestyle and profession of the owner comes in to play. Preferred customers for insurers are those who are categories in respectable professions. In short people who exercise great caution and who have attended seminars relating to safe driving tips by the AAI are generally regarded and looked upon favorably by the insurers. A 5 percent discount is offered to owners who are already a member of AAI. In the same vein, professionals like the Chartered Accountants and Doctors are favored with a 5 percent discount in the premium amount. Lately companies have also started to weigh in the age of the drivers in determining the insurance premium. General perception is that people above the age of say 45 years are generally more careful drivers hence, insurance premium for them is lower than say a driver with an age of 20 years.
Color of the Car: The practice, which is widely exercised internationally, of deciding the premium based on the color of the car, has not found a foothold in India as yet. The Indian consumer does not buy into this type of rationale. For him/her the premium should remain constant, be it a car with red color or white. But according to studies on human behavior, conducted mainly in the west, the red color is thought to be chosen by an aggressive driver who therefore is more prone to meet an accident.
Before you negotiate : Note a reduced cover is what you get for a lower insurance premium. For example many companies have discounted the damages caused due to flooding in order to reduce the premiums and make it more attractive to customers. It was only during the devastating flood of Mumbai that people realized the lack of cover for flood in their car insurance policy. So before you pump the accelerator for all its worth and zoom in the glory, carefully read the document. Try to figure out the insurance cover which the policy entails. Rightly as the adage goes “prevention is better than cure”.
Insurers Preferences for the car
- Petrol engine.
- Anti-theft devices.
- Air bags.
- High-end models.
- Accident-averse models.
- Non-commercial vehicle.
- Non-metro usage.
- Locally manufactured spare parts.
- Recent manufacturing.
Insurers preferences for Drivers
- Good eyesight (read do not use a spectacle).
- Is a Chartered Accountant or a Doctor.
- Preferred age 30-60.