A Guide to Using a Car Insurance Premium Calculator
Car ownership has transformed from luxury to necessity. This is why investing in automobile insurance is a savvy move, ensuring protection and peace of mind on the road. An automobile insurance policy provides financial protection against unexpected accidents and minor incidents on the road. A car insurance policy is legally required and will keep you and your vehicle safe at all times.
An online car insurance calculator allows you to determine the damage premium for your car insurance policy based on parameters such as the make, model, variant, RTO, and other details about your vehicle. Using a car insurance premium calculator, you can estimate the cost of getting motor insurance for your four-wheeler.
How to Calculate Car Insurance Premium Using a Premium Calculator?
You can alculate your insurance premium with a car insurance premium calculator. Follow these step-by-step instructions:
Step 1: Open the online car insurance calculator and enter the needed details like car model, fuel type, and version of your vehicle.
Step 2: Select your car's registration details from the RTO list.
Step 3: Select the year you bought your car.
Step 4: If you have already claimed insurance previously, click 'Yes;' otherwise, choose 'No.'
Step 5: Click the 'Calculate' button.
Step 6: View your car's insured value and premium estimate on the screen.
How are Car Insurance Premiums Calculated?
To learn how car insurance companies determine premiums, use this easy method.
Car Insurance Premium = (Own Damage + Third Party Liability) - (No Claim Bonus & Discounts).
However, the premiums for various cars will be different. This is because there are several factors affecting the premium of the cars. These factors are as follows:
- Type of car insurance: The type of car insurance you choose has a significant impact on the amount of your premium. Third-party motor vehicle insurance is required by law, whereas comprehensive insurance is optional.
- Engine capacity: The premium amount is determined by the type of engine used and its capacity. For example, diesel automobiles are more expensive than petrol vehicles, so your insurance premium will be higher.
- Vehicle age: Vehicles between 3 and 5 years old are considered low-risk. As a result, the automobile insurance policies are priced reasonably. However, when your vehicle gets older, you are liable to pay greater premiums.
- Added coverage: Add-on coverages for auto insurance allow you to tailor your policy. With these coverages, you get additional protection for your vehicle against a variety of potential damage scenarios.
- Financial history: A good financial history or credit score indicates that you are capable of paying premium rates. It shows the likelihood that you will pay the premium on time. As a result, having a high credit score can help you get lower premiums.
- Registration location: Premium costs for vehicles in metro cities vary from those in tier two or three cities. Metro cities are considered high-risk places, thus you may have to pay high insurance rates.
- Driving history: If you have a solid background, you are a low-risk prospect for insurance providers, thus, you may be eligible for lower premium rates.
How to Calculate Insurance Premiums for Used Cars?
Each insurance company has unique conditions for calculating premiums. The online car insurance calculator tool assists you in finding the best auto insurance policy for your car straightforwardly and conveniently.
To calculate the premium for used autos, you will need the following information:
- Type of car
- Fuel Type
- Details of the current car insurance coverage
- Car registration number and ownership change details
- Claims from past years, if applicable
The used car insurance calculator tool will quickly display the premium required to insure the car.
How Do You Calculate Insurance for New Cars?
The insurance for a new car is determined by the type of plan purchased. If you choose a comprehensive policy, your new auto insurance price will include both third-party and own damage premiums.
The cost of third-party insurance is established by regulatory authorities for all vehicle types. However, the own damage premium is determined using the following formula for a new car insurance calculator:
New Car Premium = (IDV x Insurer's Rate) + Additional Covers - Discounts
You can use a new car insurance calculator to find the premium for your new car in addition to using the method to calculate the cost of new car insurance.
What is IDV for Car Insurance?
Insured Declared Value (IDV) is the maximum amount an insurer will pay if a vehicle is stolen or deemed a total loss.
In a nutshell, the IDV represents the vehicle's current market value.
It is normally calculated using the manufacturer's quoted selling price for the vehicle's model and type (which includes additional accessories) at the beginning of the auto insurance policy.
After that, it is determined by compensating for annual depreciation.
If your four-wheeler gets stolen or seriously damaged beyond repair, the IDV is used to calculate the amount of your automotive insurance claim. This is why it is vital to insure your car for the right IDV.
What is IDV in Insurance for New Cars?
As discussed above, IDV is the maximum amount that can be insured for a car in case of total loss. When you buy a new car, the IDV is calculated using the manufacturer's selling price, which includes depreciation. The IDV calculation formula for insurance is shown here. Use an IDV calculator for car to quickly determine the Insured Declared Value of your car.
IDV with Accessories = (MSP - Depreciation) + (Accessory Value - Depreciation)
IDV without accessories formula = Manufacturer's Selling Price (MSP) - Depreciation of the car.
What is IDV in Car Insurance During Renewal?
IDV is a key factor when you are determining your car’s insurance premium. Over time, its IDV reduces, with new vehicles commanding the highest insured value. However, insurers offer add-on coverage that negates the effect of depreciation for a modest rate increase.
This coverage is something you should consider when purchasing a car insurance policy. Opting for zero depreciation coverage as part of your comprehensive car insurance policy ensures that the full invoice value of the car is paid out in the event of total loss.
The car insurance premium calculator is simple to use and produces results in just a few seconds. You can use it from the comfort of your own home and enjoy a hassle-free and paperless policy-purchasing experience.
One of the primary benefits of using a car insurance calculator tool is that you will not be influenced by insurance agents who are ultimately aiming to meet their sales quotas.
In the car insurance cost calculator, you may alter the coverage variables to observe how the premium varies. The tool is a good way to educate yourself on the details of a plan, which will help you make the best decision when purchasing insurance.