How to choose best Car Insurance Policy – Premium affecting factors

How to choose best Car Insurance Policy, Buying a car is like a dream for many in India. Selecting a good car with great features is hard to find.

CA Yash Shah

Car Insurance Policy

How to choose best Car Insurance Policy,Buying a car is like a dream for many in India. Selecting a good car with great features is hard to find.Many Indian car buyers often take loans to pay for the car.

It very important to buy a good car insurance because of long term. Buying a car insurance can be hard for many insurance buyers. Usually auto dealer’s sales team will try to convince the car owner to buy insurance for the newly purchased car. However, it is very important that the car owner should have a good idea about car insurance available before buying. Now check more details about “How to choose best Car Insurance Policy” from below…..

How to choose best Car Insurance Policy

Categories of Vehicle Insurance

Car Insurance generally provide claim for damage or loss due to accident or loss due to theft. For e.g. if the car explode or if the car is damaged during riots. Sometimes the car is damaged because of unforeseen Act of God.

Usually the general insurance providers have two categories of vehicle insurance:


Content in this Article

1. Third party Insurance: This policy is important for all vehicles in India.
The policy provide cover for damage to property. Accidental death or injury to third party is also covered.

2. Comprehensive Plan: Many experts recommend a complete plan. The comprehensive plan provide complete protection.
This plan is best when a loss or damage happen due to third party.
They also provide other additional services on the basic policy for more effective cover.

Premium affecting factors:

Risk determine the premium on any car insurance. This risk is calculated by the insurance company. However, the premium of the car is directly linked to the Insurer’s Declared Value (IDV).

There are four main factors affecting the risk:

  • Risk related to vehicle: Diesel vehicles have 10 to 15 % higher premium than other cars. Sports Utility Vehicle (SUV) and commercial vehicles require higher premium.
  • Risk related to location: More populated areas and urban areas have higher premium than semi-urban areas.
  • Claim History: If the individual has already claimed before. The premiums go up the next year.
  • Driver age: The age of the buyer is also one of the greatest factor when deciding for insurance premiums.

The best car insurance policy is the one that provide an overall protection. Lower premiums are also wanted by many car insurance buyers. Insurance buyers can save up to 55% on renewing insurance by picking up the best plans. Maintaining a good credit score is also very important to get better and lower premiums. Sometimes getting extra services on the insurance is also a good way to choose an insurance.


It is thereby advised to a car buyer to first check available insurance. Before buying a car insurance a buyer must first compare the available options. Comparison can be done online or through insurance brokers. After this a decision should be made. It is absolutely important to buy a good insurance policy. It can help an insurance buyer save a lot of money.
Buying cheap insurance is not a good idea, since it should be bought for long term.

Recommended Articles

CA Yash Shah

Yash Shah is passionate article writer in and has written more than 100 articles in the field of Finance, Insurance, Stock Market, Company Law, Auditing, Taxation and many others. In case of any queries or suggestions, you can reach the author @, you can also catch him on facebook @ yashshah299

Related Post

Join the Discussion