Calculate Your Car Insurance Premium in 7 Simple Steps

Whether you’re buying the first insurance for your brand-new car or renewing your existing policy, a lot depends on the car insurance premium. The premium is essentially the cost of your insurance policy that you pay over time. However, it can be a hassle to calculate the premium because countless factors influence its cost. Luckily, you can always calculate the premium online.

So, read on as we walk you through the steps to estimate car insurance premiums using online calculators. While we are at it, you’ll also learn about the factors affecting the car insurance premium. 

Steps to Calculate Car Insurance Premium Online

Before you can use an online calculator to estimate your car insurance premium, make sure to have the following details ready:

• Car’s model and variant
• Manufacturer
• Fuel Type
• RTO
• Registration Year

If you’ve previously filed a claim, you’ll also need the following details for premium calculation:

• Claim History
• No Claim Bonus

Now, we can go online and calculate your car insurance premium. Just follow these steps:

Step 1. Search for your insurance provider’s website or insurance marketplaces like PhonePe.

Step 2. Find premium calculator or generate quotes

Step 3. Select your vehicle’s make, model, trim, engine, and fuel type in the calculator.

Step 4. Enter the date when you purchased your car.

Step 5. In case you’ve raised a claim in the past, select Yes and enter details of past claims. Else, click No and move to the next step.

Step 6. Select add-ons you wish to include in your car insurance policy.

Step 7. Click on options to ‘Calculate’ or ‘Get Quotes’. 

Most online car insurance premium calculators show your estimated premium and your vehicle’s Insured Declared Value. 

Formula to Calculate Car Insurance Premium

Technology makes things much easier, from calculating premiums to purchasing car insurance. However, if you’re one of those owners who like to keep tabs on all the numbers, you can always verify the online premium estimates manually. Simply use the following formula:

Car Insurance Premium (Comprehensive) = Own Damage Premium – (No Claim Bonus + Discounts) + Third-Party Liability Premium.

The Insurance Regulatory and Development Authority of India (IRDAI) sets the third-party insurance premium based on the vehicle’s engine. 

For Private Cars-

For electric vehicles, prices are based on battery capacity:

To calculate your own damage premium, you can use the following formula:

Own Damage Premium = IDV X (Premium Rate Set by the Insurer) + (Add-Ons – Discount & Benefits)

You can also calculate the Insured Declared Value (IDV) of your car using this formula:

IDV = (Showroom Price of Your Car + Cost of Accessories) – (Depreciation Value of Car + Depreciation Value of Accessories)

Factors that Affect Car Insurance Premium

Now that you know how to calculate car insurance premiums online and manually, let’s examine the factors that decide a policy’s premium amount. 

• Make and Model: High-end cars with costly spare parts tend to attract more premium. Similarly, the premium for upper-level variants of a car is more expensive than their lower-spec versions. 
• Engine Type: Insurers charge a higher premium for cars with more powerful engines, measured in cubic capacity (CC), due to their complex design and costly parts. 
• Fuel Type: Diesel vehicles have a higher premium compared to their petrol counterparts.
• Age of Vehicle: Newer vehicles have higher IDVs, which increases premiums. On the contrary, older cars have lower IDVs due to heavy depreciation, reducing their insurance premium. 
• Type of Cover: If you get the mandatory barebones third-party insurance, the premium is as low as Rs 2,094 for any vehicle with less than 1,000 CC engine as set by IRDAI. However, if you opt for comprehensive car insurance, which includes third-party and own damages coverage, the premium is way higher. 
• Add-Ons: If you include an add-on to your policy for extended protection like zero depreciation charges, engine protection, roadside assistance, etc., you’ll need to pay extra towards the premium.
• Deductibles: A deductible is a predetermined amount you agree to pay out of your pocket towards claim settlement. The higher the deductible amount, the lower your car insurance premium. 
• NCB: The No-Claim Bonus (NCB) is a bonus you receive for every year you don’t file a claim. Not filing minor claims can help you accumulate NCB and get discounts of up to 50% on premiums. 

Key Takeaways

Online car insurance premium calculators offer a hassle-free way to estimate the cost of purchasing a car insurance policy. However, one must also be knowledgeable about factors that affect car insurance premiums to ensure one doesn’t overpay for policies. Backed by the knowledge from this blog post, you are ready to make smarter decisions, be it comparing offers from different insurers or negotiating benefits and discounts. Using platforms such as PhonePe can simplify the process of selecting and buying the right car insurance.