How does the car insurance premium calculator work

How does the car insurance premium calculator work

Most of us dream of buying a car and it is an important milestone as well. One puts in lots of thought process into buying a car and taking care once you get your hands on it. Thus, ignoring car insurance does not add up, as it takes care of your car and you as well. A good car insurance would ensure you and your car is safe from any sorts of unfavorable incidents in the future. A car insurance premium calculator becomes really handy at such times.

What is car insurance calculator?
The majority of the car insurance companies these days provide their customers with dynamic online tools called as a car insurance premium calculator. This allows customers to get an insurance quote for their vehicles and also a grasp on the insurance premium that they would end up paying. The websites of the insurance companies require basic contact information from you along with details of your car and its insurance.

Car details such as registration number, the car manufacturer, year of manufacture, etc. are to be entered. At the end of this exercise and at the click of a button you get the quote. If you like what you have at hand, then you can proceed with buying the insurance online.

How does it work?
The car insurance premium calculator factors in all the information provided by you initially and calculates the insurance premium applicable for you. The following are some of the factors that govern your insurance premium.

Manufacturer and Type
Depending on the type of vehicle and manufacture, the insurance premium also fluctuates. For an example a premium brand would fetch higher insurance premiums. Similarly, SUVs demand for higher premium amounts as compared to hatchbacks.

The zone in which resides also impacts the car insurance premium. Given the traffic condition of the urban places, the insurance premiums might be higher in such places when compared to sub urban areas.

No Claim Bonus
While entering information for getting the quote, one usually would have entered details regarding any existing insurances. This information along with an additional question such as if you have claimed insurance in the previous year helps in calculating the NCB.
Other factors affecting Insurance premiums

IDV or insured Declared Value
The value of a car depreciates over time, but still is worth something at all points in time. This value is referred to as the IDV and is also the amount that the insured would be compensated with under different circumstances. This is one of the most crucial factors in deciding the insurance premium of a car. Higher IDV calls for a higher insurance premium and vice versa. Usually the IDV is calculated as a result of depreciation deducted from the list price of the car.

Over the years there have been lots of instances of fake insurance claims and also claims for relatively smaller fixed. To counter such situations, insurance companies require customers to pay a minimum amount during each claim. This amount is referred to as deductibles or voluntary deductible and it impacts the insurance premiums.

We all are fond of our vehicles and in the process, install some accessories which might not be part of the list price of the car. Thus, they are usually not covered as part of the car insurance. But at some additional cost, one can include them in the insurance as well.

It is very important to understand the insurance that you opt for your car. Uninformed decisions lead to a situation, where you have covers that might not necessarily be required by you. And on the other hand, you might be missing out on some covers and features that are essential for you.

The car insurance is one such tool that helps you take better decisions in terms of car insurance. But one must look into the additional features and components as well. If you do not want some of the features, you can drop them and save money on the insurance premiums.


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