Car Types and Its Impact on Car Insurance Premiums

In India, Insurance is seen as a heavily complex matter and a necessary evil. Thus, most purchase car insurance merely because it is made mandatory by law. But what most do not realize is that purchasing insurance is pretty simple nowadays. With the advent of online policies and facilities of comparing and contrasting various car policies; You can choose the best fit and enjoy all the security and benefits that come with the policy.

One of the most sensitive points for any customer is the car insurance premium that he/she is required to pay. Most are unaware of the nitty-gritty involved in the calculation of the premium amount. We solve the riddle to an extent by throwing light on one of the important parameters used to calculate your car premium i.e. your car type. Stay hooked!

The correlation between the car type and the car insurance premium

Most believe that the car model and make do not affect the payable premium amount. But the fact is that it plays a vital role in determining the premium amount. As a thumb rule, you need to pay a higher insurance premium amount for a more expensive car.

To understand this further, let us first understand the three broad categories of cars. They are:

  • Hatchback

It is one of the most common types of a car owned by most people and is defined by its rear door opening upwards. Most such cars have four-door configuration excluding the rear door but you can find few two-door cars in this category as well. Maruti Suzuki Alto 800, Hyundai Grand i10 are examples of such cars. MINI Cooper S 3 Door is a type of two-door hatchback.

Being the most common type of car; these attract the standard premium.

  • Sedan

A sedan typically has four doors and a typical boot/trunk. One of its technical characteristics is that it has a 3-box configuration. Each of the boxes is respectively used for engine, passenger and cargo. These are considered premium cars and attract a higher premium than the former category.

  • Sports Utility Vehicle (SUV)

It is typically a big and luxurious car that is built on a body-on-frame-chassis. It has sports increased ground clearance and offers both soft-roaders and off-roaders capabilities to some extent. They are often flashy and expensive and attract a much higher premium.

Apart from these, you find various other categories like the crossover, coupe, etc. which are a combination of one or two of the broad categories. Based on its features and pricing, the premium amount is calculated.

Why do the car model and make, impact the car insurance premium?

On a basic level, two major factors make your car model and make, an important consideration for the calculation of the premium amount.

  • IDV and its associated parameters

An integral and important part of any Car Insurance Policy is the IDV of the car or the Insured Declared Value. It is the market value of your car and the maximum amount that any insurance company will pay you if your car gets damaged beyond repair. It is for this exact reason that the price of your car impacts your car premium.

It is for this reason that that Hatchback has the least premium amount while the high-end SUVs and sedans have a higher premium rate.

Another important factor is the year of manufacture of your car and the date of registration of the car. An older model is less likely to have its spare parts available in the market. It implies that the repairing of the car would not only take more time but also prove more expensive due to the rare availability of the car parts. It would inevitably imply a higher premium.

The fuel used to drive your car is another important consideration. For instance, compared to petrol-driven cars; diesel-driven cars attract a higher premium.

  • Car Claims

Another important factor that most car insurance companies pay heed to is microscopically understanding the ratio of the claims and the car types. There are specific cars that are most stolen or are more vulnerable to get damaged. Thus, even if your car is a hatchback but heads the list of most stolen cars or is highly vulnerable to damage; it will attract a higher premium.

A flashy or a sports car might have comparatively less premium as it might be least likely to be stolen.

Wrapping up

By now, we understand how the car type and model impact the car premium amount but several other factors also play a key role in determining the premium for your car like the type of car insurance, security features of your car, the anti-theft device installed, add-ons, etc. You can easily ponder over everything and make the best decision with your car insurance policy.