Car Insurance Premium Variations as per Different Indian Regions

Car Insurance Premium Variations as per Different Indian Regions

Ravi recently got into an argument with Anil, his cousin, over the issue of premium charges. They both have purchased the same car insurance policy, opted for the same coverage, and even their car models are the same. Yet, Ravi is paying less premium as compared to Anil. And the latter is not ready to accept the fact that Ravi is enjoying the same facilities even after paying less. Is this even possible?

Yes, premium charges for your car may vary as per the place/zone where you reside. But what is the reason behind this difference? Let’s find out!

Why Varying Premium Rates In Different Regions?

Suppose you reside in Delhi, and your brother stays in Gwalior. You two have bought the same cars and the same insurance plan. Even then, you will be the one who pays higher premium charges. 

IRDAI emphasizes the traffic and vulnerability of any city. If you have got your car registered in a city that experiences traffic issues, then the premium charges will be high. Also, if your car is vulnerable to burglary or accidents, then too, the premium charges can go up. That’s why the rate of premium charged by insurance companies varies in different regions across India. 

So, if you are planning to shift to another city, know that the car insurance premium charges will differ. Depending on the location you are migrating to, it can go up or decrease.

Know About Different Indian Car Insurance Zones

IRDAI or the Insurance Regulatory and Development Authority of India manages and regulates the Indian insurance industry. As per IRDAI, different Indian regions have been divided into multiple zones. 

Zone A: New Delhi, Mumbai, Kolkata, Hyderabad, Bengaluru, Ahmedabad, Chennai, and Pune

Zone B: The rest of the cities and states in India

If you get your car registered in Zone A and buy your car insurance policy, you will have to pay higher premium charges. On the other hand, premium rates for Zone B cities tend to be on the lower side.

Car Insurance Premium Calculation As Per Zones

To calculate the rate of premium precisely, insurance companies take into consideration two significant factors- the cubic capacity and the age of your car. Here’s the table that will give you a clear idea about premium rate calculation across the two zones in India. Have a look!

Zone A

The cars that get registered in Zone A cities are more likely to fall prey to theft and accidents. This is so because tier 1 cities in Zone A are heavily congested, which leads to traffic issues. As a result, the liability of the insurance company increases manifolds. Hence, they charge more premium from the policyholders.

Age of your vehicleCars (less than 1000 cc)Cars (1000 cc – 1500 cc)Cars (more than 1500 cc)
0 to 5 years3.127% of the IDV3.283% of the IDV3.440% of the IDV
5 to 10 years3.283% of the IDV3.447% of the IDV3.612% of the IDV
10 years or more3.362% of the IDV3.529% of the IDV3.698% of the IDV

Note: IDV stands for Insured Declared Value

Zone B

Tier 2 cities come under Zone B. They are not way too crowded. Hence, there are lesser chances of accidents and burglary. So, if you have bought a car in Zone B and got it registered here, you will be paying low and pocket-friendly premium charges.

Here’s how car insurance premium rates are calculated in tier 2 cities in India:

Age of your vehicle

Cars (less than 1000 cc)

Cars (1000 cc- 1500 cc)

Cars (more than 1500 cc)

0 to 5 years

3.039% of the IDDV

3.191% of the IDV

3.343% of the IDV

5 to 10 years

3.510% of the IDV

3.351% of the IDV

3.510% of the IDV

10 years or more

3.267% of the IDV

3.430% of the IDV

3.596% of the IDV

Factors That Can Impact Car Insurance Premium

Here are a few more factors that can affect your overall insurance premium:

  • Make and model of your vehicle: Car insurance companies consider the make and model of your car while finalizing the premium charges. So, if you own a plush sedan, you will have to pay more premium for it as compared to a hatchback owner.
  • Insurance coverage: Insurance premium rates also depend upon the coverage you want to choose for your four-wheeler. You may want to get a comprehensive car insurance policy. It would cost you more as compared to a third-party liability insurance plan.
  • Add-ons: The add-on covers that you purchase to enhance the coverage of your life insurance premium also affects the rate of premium you are going to pay. The higher the number of add-ons in your insurance plan, the higher will be the payable premium.
  • Voluntary deductibles: If you opt for voluntary deductibles, your overall premium will come down as the liability of the insurer gets reduced to some extent. Basically, when you go for voluntary deductibles, you agree to pay a certain percentage of the amount during claim settlement.
  • Safety features: If you have installed a high-tech anti-theft device on your car to prevent instances of burglary, then too, the premium goes down. This is so because by installing the safety device, you have already reduced the chances of your car getting stolen.

Wrapping up!

If you have just bought a car and are planning to buy a car insurance plan, do not take advice from your relative who stays in another city. Rather, refer to this blog to get accurate ideas regarding the premium charges. Once you go through the blog, you will be able to calculate the rate of premium based on your locality. For further details, you can get in touch with your insurance company.

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