In India, car owners must get vehicle insurance irrespective of their location.The insurance premium may differ based on your car model and the area where you initially registered your car.Other factors affecting your insurance premium include the type of plan, your claim history etc.
For convenience, the Indian states are categorised as zones, and the premiums are calculated based on this zonal divide. So, you will find that car insurance is more expensive in certain states than in others.
The reasons affecting the cost of car insurance premiums in different zones or states include:
- Location of car registration
The motor insurance premium gets affected by the location of the car’s registration. You must get your car registered at the local RTO (Regional Transport Office); the insurer makes a note of this when processing your insurance request. So, not only can the premium but also some related fees may differ. The premium may shoot up drastically for vehicles registered in metro cities like Mumbai, Delhi etc.Remember, what matters is the registration location, not where you use your car. You may use it in a less crowded city, but since it is registered in a metro, you will have to bear the cost of the premium meant for the metro.
- Bifurcation of areas into zones
The IRDAI (Insurance Regulatory and Development Authority of India) has divided different regions across the country into different zones—Zone A and Zone B.
The IRDAI fixes the mandatory third-party insurance premium for all vehicles. Zone A includes metro cities likeMumbai, New Delhi, Kolkata and Chennai, and other big cities like Bengaluru, Hyderabad, Puneand Ahmedabad. The rest of India comes under Zone B. Compared to Zone B, your insurance premium would be higher if you are located in Zone A.
- Probability of claims
Metro cities and urban areas are usually more densely populated, with more privately owned vehicles than rural areas. This leads to more traffic congestion, rash driving, accidents, damage to vehicles etc., in these areas.Therefore, the insurers anticipate a higher probability of claims in these areas and fix a high premium to cover the risk from their end. So, a car or bike insurance policy in Zone A would be more expensive than in Zone B.
What can you do to reduce your vehicle insurance premium?
You can take some steps to reduce the overall expense of your car insurance irrespective of your car registration location—Zone A or Zone B. These steps include:
- Avoiding internal or external modifications
Modifications to your car, such as adding lights, changing the look of the bonnet, tyres, flared wings etc.,may increase the premium. Similarly, any change in the dashboard, air conditioner, hornsand seats would affect the premium.
- Renewing the policy on time
Delay in renewal can result in policy lapse, causing unnecessary hassles such as inspection, paying penalties etc. Besides, you would also lose the accumulated NCB or No Claim Bonus.
- Compare different plans
With the internet providing you access to several plans, offers, and car insurers’ websites, you can research car insurance policies and compare the extent of coverage and discounts before choosing the one that suits your needs and budget.
- Selecting add-on covers
There are several add-on covers available in the market. However, they come with an additional cost. Therefore, select only those necessary for you,such as personal accident cover, zero depreciation cover, NCB protector, etc. Make a decision based on your needs and the scope of coverage.
- Security devices for your car
Installing some certified anti-theft devices on your car can provide added security. In addition, many insurers would give you additional discounts on the premium if your car has these devices.
Thus factors such as the location of registration and the type of policy play a crucial role in determining the overall vehicle insurance premium. In big cities, car policies are costlier mainly due to the increased risk for insurers. However, you can always explore the various ways to reduce your premium.