Monday, June 27, 2022

How To Calculate Basic Premium For Car Insurance

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The Average Monthly Cost Of Car Insurance In Bc

Despite an almost entirely government-run insurance market, B.C. drivers pay the highest car insurance rates in the country.

The base premium for basic insurance is $1,063. The base premium either rises or falls depending on your driving and insurance history. According to the Insurance Bureau of Canada, drivers pay an average of $1,832 a year for car insurance.

As in Ontario, the car insurance industry blames rampant fraud for sky-high B.C. insurance rates. Other factors that contribute to B.C.’s steep premiums include strict mandatory minimum liability regulations and generous accident benefits laws. Some experts also say the lack of competition in the province’s government-dominated insurance market is a key contributor to high insurance rates.

Decoding Factors Affecting Car Insurance Premium And Easy Solutions

Now that you have the insurance premium amount in front of you with the aid of the car insurance premium calculator, it is imperative to know some of the factors that affect your premium amount and how the number is arrived at. We also show you ways in which you can reduce your car insurance premium amount.

How Car Insurance Premiums Are Calculated

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To better understand how much car insurance costs, it really helps to understands how car insurance premiums are calculated. There are a number of factors that insurance companies take into consideration. It pays to understand how it works, so you can find the right coverage for your needs – at the right price. Here are eight different things that are taken into account to calculate car insurance:

Benefits Of Car Insurance Calculator

A car insurance calculator is a very helpful online tool that helps you to calculate and figure out the insurance premium cost for your car/vehicle. It instantly calculates the premium amount considering details such as cars make, model, RTO details, Insured Declared Value , etc.

  • Using a car insurance calculator helps save time. It instantly tells the premium amount for your car offered by various insurance providers available in the market.
  • It compares the premium rates as well as other variables offered by multiple insurers and helps you choose the policy best suitable for your needs and demands.
  • It offers you flexibility as there is no rush to make a decision and no external influence of an agent which may affect your choice.
  • It can help you select the right add-on covers for your car insurance which are suitable based on your budget and requirements.
  • It allows you to adjust different factors like deductible, IDV, etc., which affect your premium. With this premium calculator, you can try variables till you get a perfect combination for you.

Factor Which Determine Car Insurance Premium Calculation

Car Insurance Calculator

Here are some crucial factors which determine the calculation of premium amount for car insurance:

  • Vehicle owners age

According to track records, insurers consider that vehicle-owners below the age of 25 years are more likely to be involved in a mishap or road accident. This is why individuals aged between 18-25 years tend to pay a higher premium value for coverage than others.

  • The fuel type required to run the vehicle

The premium for CNG fitted vehicles is higher than the premium charged for coverage of regular petrol/diesel run vehicles.

  • Geographical location

Insurance providers also rate the premium according to the place where the insured car will be mostly driven. For instance, areas with a higher traffic density such as urban cities will be charged higher premium rates than rural locations or areas which have lower risks and traffic density.

  • Insured Declared Value

Insured Declared Value is the maximum amount that an insurer pays to a policyholder in case of total loss or theft of the vehicle. The IDV depends on the brand, manufacturer’s selling price, a model of the vehicle, RTO details, etc. It affects the own damage premium of the insurance policy.

  • Cubic Capacity

Cars Cubic capacity also helps determine the premium for the Own Damage cover. Cars make, model and variant also affect the premium of your cars insurance coverage.

  • Cars manufacturing yea
  • No claim bonus
  • ARAI Anti-theft discount

Rising Number Of Road Accidents

In 2019, our country reported close to 4.4 lakh road accidents as per the NCRB report. That is a perturbing number of approx. 191 road accidents per 1 lakh vehicles in India. In these accidents, around 1.54 lakh people died and close ~4.4 lakh people reported injuries.

As per the chart, there has been a steady decrease in road accidents since 2015. However, thats not enough recovery, as India ranked third in the world when it came to the number of road accidents in 2018.

How Often Do I Have To Pay My Premium

Different insurance companies will ask you to pay your auto insurance premium at different intervals. The most common options are monthly, twice a year and annually.

Many insurance companies will let you choose how often you’d like to payâand you’ll typically get a “paid in full” discount when you pay pay more upfront.

>> LEARN MORE: Car Insurance Discounts You May Be Eligible For

However, in some cases, you may be required to pay your entire term upfront. This is particularly common if you’re deemed an at-risk driverâfor example, if you previously let your insurance lapse or you require an . This is one way insurance companies reduce the risk of insuring at-risk drivers.

Other Factors That Can Affect Your Car Insurance Quote

Your car make and model arent the only factors that go into an auto insurance quote. Other factors that affect your quote include:

  • Personal characteristics like age, gender and marital status. For example, teen drivers have higher car insurance quotes on average than any other age group.

  • The coverage you choose. The more coverage you have, the higher your insurance rates are likely to be.

  • Your driving record. A recent DUI, speeding ticket or at-fault accident can raise your rates.

  • Your location. Every state has different car insurance minimums, and factors like your neighborhood’s crime rate and population density will affect your insurance price.

  • Your credit score. Drivers with poor credit typically have higher car insurance rates. Insurers use a , which is different from your regular credit score, to determine the likelihood youll file a claim. A credit-based insurance score looks at factors such as payment history and outstanding debt but can’t use any personal information like your income or occupation to determine your score. California, Hawaii and Massachusetts have banned insurers from using credit scores when calculating car insurance rates.

  • Your car insurance history. This can include whether your car insurance has lapsed, insurance claims, how long youve been with your insurer and your last insurance company.

» MORE:Car insurance quotes: What you need to know

Why Is It Important To Compare Auto Insurance Premiums

Not all car insurance coverage is the same and it also varies by insurer.  is a good way to find the lowest rates and save cash.

Using a car insurance premium calculator can save you time and money before you make your decision. Keep in mind that car insurance companies regularly adjust their prices and periodically shopping around for car insurance is recommended. You can visit Credible to explore their auto insurance options.

It pays to shop around. The best way for you to be prepared, and possibly lower your premiums, is to use a car insurance premium calculator to give you a better understanding of how much you will pay towards your premium.

Why Is It Important To Use A Car Insurance Calculator

Using a car insurance calculator is extremely important. It will provide you with all the vital information required to make an informed purchase decision. Here are some reasons why you should use online car insurance calculator before buying a motor insurance policy for your vehicle.

This is one of the most important reasons why you should use a car insurance calculator. It will tell you how much your premium amount will be based on the specifications of your car and the coverage you have selected.

An online car insurance calculator allows you to adjust numerous factors that affect the premium of your policy. These include IDV, the voluntary deductible, etc. You can try different variables until you find a combination that matches your coverage and fits your budget.

A car insurance calculator can help you choose the right add-ons. You can select the add-ons you think are suitable and the calculator will adjust the price based on your choices. You can then try different add-ons to find a price point and coverage level thats suitable for you.

Our car insurance calculator works for old cars and new cars, both. You dont have to look for a separate car insurance calculator for new cars or a different car insurance calculator for old cars.

How To Compare Car Insurance Quotes Online

Online car insurance calculator has made it easier for customers to view the premium amount payable, instantly. It is important to keep certain factors in mind, while we compare car insurance quotes online. Heres what you need to consider when comparing car insurance plans:

  • It is important to examine factors such as the features and inclusions to identify the right choice.
  • Insurance cover is the next important factor that lets you select the plan. Typically, lower the premium, lower is the insurance cover. Hence, it is important to go through the plan details.

  • Check for the add-on covers made available with the plan, so you can enhance your financial protection against damages.

How Is Car Insurance Premium Calculated

You can easily calculate car insurance premium with the help of the car insurance premium calculator. The premium of a car insurance plan depends on the coverage of the plan and other factors such as cars make, model, variant, fuel type, RTO location, etc. The premium for third party car insurance plans is fixed by the IRDAI and it depends only on the cars engine capacity, whereas the premium for standalone own-damage &comprehensive car insurance plans is determined by the insurance companies and varies from the policyholder to policyholder.

Lets understand the premium price calculation for vehicle/car insurance better with an example.

For example, Mr. A wants to purchase a car insurance policy for his Hyundai i10 Asta which has the following details:

  • Engine Capacity: 1197 cc
  • Registration City and Year: Noida and 2018
  • NCB: 20%
  • Policy Tenure: 1 Year
  • At InsuranceDekho, Mr. A can find the following premium quotes for his car/vehicle bearing the above-mentioned details:

    Car Insurance Plan

    Is Od Insurance Mandatory By Law

    Vehicle Insurance Premium Calculator Video (With images ...

    No, an OD insurance for your car or bike isnt mandatory but is recommended for protection for your own vehicle. As per the Motor Vehicle Act, the basic Third-Party Insurance is mandatory for all vehicles. Additionally, you can also opt for a Comprehensive Insurance to cover for both Third-Party Liabilities and Own Damages, both within one policy.

    No, an OD insurance for your car or bike isnt mandatory but is recommended for protection for your own vehicle. As per the Motor Vehicle Act, the basic Third-Party Insurance is mandatory for all vehicles. Additionally, you can also opt for a Comprehensive Insurance to cover for both Third-Party Liabilities and Own Damages, both within one policy.

    Increase In Car And Bike Thefts

    In 2019, close to 2.4 lakh car and bike thefts were reported in the country as per the report released by National Crime Records Bureau .

    This is a Compound Annual Growth Rate of close to 2% over the last 3 years. This means 105 vehicles were stolen out of every 1 lakh vehicle in India, with only 25% getting recovered later.

    Hence, it is increasingly important to insure your car with Comprehensive Car Insurance to avoid financial loss in case of theft. If we further dissect this data statewise, 11 states contributed to 70% of vehicle thefts in India.

    Grid Premium For Basic Coverage

    • Grid applies only to basic coverage premiums ; additional coverage is based on your insurance companys rates.
    • Approximately 6% of drivers are rated on Grid.
    • Less experienced drivers are often capped by Grid.
    • As drivers gain experience and drive without claims and convictions, their premiums decrease.
    • Inexperienced drivers with driver training start at 10% below the entry level .
    • Each year without an at-fault claim in third party liability coverage, the driver receives a further 5% to a maximum 50% reduction to the base premium .
    • Each at-fault claim moves the driver 5 steps up the Grid.
    • Convictions and at-fault claims result in surcharges on premium.

    What Is A Car Insurance Premium Calculator

    A car insurance premium calculator is an online tool that provides you with an estimated premium amount for your car insurance policy. Based on details such as the make and model of your vehicle, the year of purchase, model variant, IDV, and so on, the car insurance calculator helps you in finding a policy that suits your budget.

    How To Calculate Car Insurance Rates And Save Money

    There are a number of factors that determine the monthly cost of car insurance. When deciding on the appropriate price, insurance companies look at the likelihood that youll make a claim and the potential loss amount.

    Thats why we ask for details about your driving habits and your insurance history, the make and model of your car, as well as how old you are. Your answers will determine how much you pay.

    Never lie to an insurance company for the sake of scoring a lower rate. It will backfire and may even result in you losing your insurance altogether .

    Here are the most important factors that influence your premium and why we need to ask for this information.

    If youre looking to insure a newer car, it might be a good idea to purchase collision and/or comprehensive insurance. Both types of coverage will help pay for repairs, or even a replacement car, since most people cannot afford to pay for a new car out-of-pocket. If our calculator detects that you are looking to insure a current model year car, it will automatically add collision and comprehensive coverage to your quote.

    Comprehensive Car Insurance Premium Calculator

    A comprehensive car insurance is a type of insurance plan that gives your car 360-degree coverage. From protecting you from losses caused to third parties to covering your own damages and allowing a range of add-on covers, a comprehensive car insurance is the only type of car insurance plan that allows for so much customization. This is where your comprehensive car insurance premium calculator comes into use, as you can try how different add-ons affect your car insurance premium making your decision a lot simpler and more straightforward. 

    Read more about the Important Components of a Comprehensive Car Insurance Premium.

    Own Damages

    This is a cover included in all Comprehensive Car Insurance Policies that covers you for losses caused due to damages to your own car. Such as in case of an accident or natural calamity. The cost of this in your comprehensive car insurance premium is determined by the make, model and age of your car, and of course the city you drive it in

    Damages to Third-Party

    This is legal and mandatory as per law and is included both in a comprehensive car insurance policy and third-party car insurance policy. It covers for damages and losses your car may cause to a third-party person, vehicle or property. The compensation for same is predetermined by the IRDAI and is same across all policies.

    Insured Declared Value

    Add-On Covers


    No Claim Bonus

    Make and Model of your Car

    Personal Accident Cover for Owner- Driver

    Age of your Car

    How Does A Car Insurance Premium Calculator Help During Policy Renewal

    Car insurance premium calculator is an effective tool for the buyers during policy renewal. This is because, you cannot just arrive at the insurance quote instantly, but also select the car insurance plan that suits your budget and requirements.

    Corporate Identity Number : U65923PN2014PLC150522.

    IRDAI Corporate Agent registration number CA0551 valid till 10-Apr-2024.

    Bajaj Finserv Direct Limited

    How Can I Reduce The Cost Of My Car Insurance

    One of the easiest ways to possibly save money on your car insurance is by comparing quotes from multiple insurance providers.

    Once you have a list of prices, check to see which policy suits your needs. Some policies may include a number of add-ons that you might decide you donât need. You could also increase your voluntary excess .

    Find Cheap Auto Insurance Quotes In Your Area

    How To Calculate Basic Premium For Car Insurance

    Your car insurance premium is the amount you pay your insurance company on a regular basis, often every month or every six months, in exchange for insurance coverage. Once you’ve paid your premium, your insurer will pay for coverages detailed in the insurance policy, like liability and collision coverage.

    Every insurance company determines its rates differently, but your premium is typically based on details about you, the type of car you own and the coverages you select.

    Comparing rates from multiple insurers is typically the best way to find savings on car insurance premiums.

    Also important to note, auto insurance premiums are separate from your deductible, which is the dollar amount you must pay before your insurance will kick in. All types of insurance require you to pay a premium, not just auto: homeowners, life and renters insurance also require premium payments.

    Why Online Car Insurance Premium Calculation Is Important

    ‘Why do I need an online insurance calculator when I can directly speak to the agents about the same?’

    Well, this is the most common notion among people these days. But the thing they don’t understand is that these agents do charge their commission, which results in an increased premium amount. They can also share partial suggestions for their benefit.

    So, before buying a car policy, you need to get an estimate of your premium amount through an online car insurance premium calculator.

    Let’s understand the importance of a car insurance premium calculator with an example-

    Vidya is a corporate employee. The location, pay and office environment is according to her desires. However, after a few years, the office location changes, and Vidya decides to commute daily through her vehicle. She buys a new car and looks for a car insurance policy.

    After a deep research, she is greeted with many car insurance plans but is unable to choose the best among them. She then decides to take the help of an agent but that doesn’t work as well. Confused and frustrated, one of Vidya’s colleagues suggests to her about the online car insurance plans.

    She enters the required details online and the result makes her confident about how much she should invest in a car insurance plan. She selects a plan and manages to save around 20% as compared to the plans offered by the agent.

    How Does My Job Affect My Car Insurance

    What you do for a living tells the insurance providers more about you and how likely you are to claim. You may think, quite rightly so, that racing car drivers pay more for their car insurance. But you may be surprised to learn that some more common job types, like estate agents, disc jockeys and football players, are also likely to pay more. This is due to a variety of factors, including being seen to drive more.

    But even similar job titles can result in different premiums, for example, construction worker and bricklayer, or chef and kitchen staff. So if your job title fits in more than one category, it might be worth checking quotes for all of them. But remember the details you give should be as accurate as possible and not misleading, otherwise you could invalidate your policy.

    The Car You’re Looking To Insure

    It’ll come as no surprise that the type of car you drive affects the cost of your premium…

    Large, powerful cars are usually more expensive to insure, because the cost to repair or replace them is higher. Low powered cars, or cars with safety features like autonomous emergency breaking , are often cheaper to insure because studies show that they’re less likely to be involved in an accident. 

    The number of cars you insure on the same policy also has an effect on your price; we offer a discount when you buy multi car insurance.

    Formula To Calculate Your Car Insurance Basic Premium

    For West Malaysia, the basic premium for a new car of each category =

    Comprehensive rate for first RM1,000 sum insured + RM26 for each RM1,000 or part thereof on value exceeding the first RM1,000.

    For East Malaysia, the basic premium for a new car of each category =

    Comprehensive rate for first RM1,000 sum insured + RM20.30 for each RM1,000 or part thereof on value exceeding the first RM1,000.

    An example of Car Insurance Premium Calculation for Both Comprehensive and Third Party, Fire & Theft Coverage :

    Note: The above rates are for private owned vehicles only and may differ from the actual premium. Coverage is subject to acceptance by the insurance company. 

    Table 3 shows the calculation of gross premium for a four year-old Proton Wira 1.5 with the insured sum of RM50,000 for both comprehensive and third party, fire & theft coverage. With cubic capacity at 1468, the basic premium will be calculated using the second tier in the previous table .

    Though the car may be four years old, 25% NCD is applied here and it is possibly because the owner has made a claim two years ago which disqualified him from enjoying the fourth year NCD .

    To get the final premium payable for a comprehensive insurance coverage, you need to add in 6% GST, optional insurance coverage and a stamp duty fee of RM10.

    Final Premium Payable for Comprehensive Coverage =

    Gross Premium + Optional Coverage + 6% GST + Stamp Duty

    Formula of Third party, fire & theft coverage premium =

    How Is It Different From A Third

    A third-party car insurance premium is no different from a regular car insurance premium calculator. This tool helps determine the premium amount payable by the customer, if opted for a third party car insurance. The major difference between third party and comprehensive insurance is in the extent of coverage offered. Car insurance premium calculator helps take into consideration, your needs and your budget, so you can not only pick the right plan, but also go for a pocket-friendly alternative.

    How Is The Own Damage Premium Is Calculated

    The Own Damage Premium either for a four-wheeler or a two-wheeler is based on:

    • Make, Type and Age of the vehicle.
    • The Declared Value of the Vehicle.
    • Cubic Capacity of the Engine.
    • Geographical Zone

    Let us look at the mathematical computation of the Own Damage Premium, but before you should know the basis of the calculation.

    OD premium – IDV X +

    IDV – Showroom Price of the Vehicle + Cost of Accessories – Depreciation as per

    How Is My Car Insurance Premium Calculated

    When calculating your car insurance premium, insurance providers will look at various factors including your occupation, your annual mileage, your , how much voluntary excess you are willing to pay, the make and model of your vehicle, where you park your car overnight, your , how long you have been driving for, your driving history, any no claims discount as well as whether or not you have added any named driversonto your policy.

    Ultimately, car insurance providers calculate your car insurance premium by assessing how big of a risk you pose to them. They do this with the help of facts and statistics related to all the above mentioned criteria.

    The Coverage You Choose

    Build your own car insurance premium calculator and buy ...

    While your provincial or territorial government dictates the minimum amount of insurance you must carry, you also have a number of coverage options to choose from. The amount of coverage you carry is an important choice, which affects the level of protection afforded by your insurance policy and how also how much your car insurance will cost. Generally, the more protection you carry, the more it will cost to insure your vehicle.Tip: If you want to lower your car insurance premium, an easy way to do it is to increase your deductible.A deductible is the amount of money you have to pay towards a repair before your insurance covers the rest. For example, if you are in an accident that causes $5,000 worth of damage to your car, and your deductible is $1,000 – you have to pay $1,000 towards the repair, and your insurer covers the remaining $4,000.

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