Smart Way to Calculate Car Insurance Premium

  • Added:
    Aug 14, 2014
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Smart Way to Calculate Car Insurance Premium Photo by Aditya Chandak

It’s always better to know the factors which the insurance companies in India use to calculate your car insurance premium. In this way one can ensure that his/her car insurance premium is as little as it should be.

Below are the important factors which will teach you the smart way to calculate car insurance premium for your vehicle.

Bear in mind: Different insurers treat these factors in different ways. So it’s a good idea to shop around and get car insurance quotes from a wide range of providers.

#Age factor

Unless you’ve made claims or have points on your licence, an insurer can’t tell whether you’re a cautious or reckless driver. So it uses statistical data from previous customers to calculate what kind of risk you might pose.

Age plays a significant role in determining your car insurance premium. Statistics explain that young drivers tend to more prone to accidents. Therefore, they are likely to make frequent claims than the other age groups. Generally people of age group between 17 & 25 have to pay the highest premiums. However, if you show clean driving records over a period of time you can discounts on your car insurance premium.


An individual’s occupation that is how he earns his living also impacts cost of premiums. Certain insurance companies consider certain jobs as linked with higher risk of claims.

#Type of vehicle you drive

Expensive cars will require greater costs while replace the stolen or damaged parts. Hence, they will charge higher premiums. However, if your car is equipped with high-end security features then you can get discounts on your car insurance premium.

#Your locality

The place you reside also affects the rate of premium. If you reside in a area which is more prone to the risk of accidents then you’ll have to pay higher premium. Similar is the case in areas where crime levels are high.

Your driving record

The driving records also will help you to determine how much premium you might have to pay. Clean driving records with no major accidents will give one the benefit of lesser premium.

#No-claims bonus!

Did you make any claims before? When you apply for insurance, your insurer will review your claim history over the past 5 years. If there are frequent claims then this will increase your premiums.

If one has not made any claims over a period of 1 or more years then he/she can receive a no-claims bonus or NCB.

#Type of cover you purchase

Comprehensive car insurance usually demands greater premium than the third-party insurance or similar specific insurance schemes. It’s because in the former case, your insurance company potentially will have to insure you against greater range of events.

#The person who has insured to drive your vehicle

The name of the drivers on your car insurance policy can also lead to the rise or fall of your premiums. If it’s an experienced driver then the premium rates will stay low. However, if it’s a young driver who has just passed a driving test then the premiums will increase.

Author's Profile

Aditya Chandak is a software Developer and he is an part time content writer writing for different areas including Insurance and Loan sectors. For more information visit: Car Insurance & Motor Insurance

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