Car Insurance Calculator: A Complete Guide

Car Insurance Calculator Guide - BimaBandhu

When you buy a car – either new or used, the first thing that you want to do is to protect it under a suitable car insurance policy. Many car dealerships often try to sell you a car insurance plan under their tie-ups with different general insurance companies. Before selecting any plan, you would ideally want to know the benefits and costs of different plans available. But this does not mean that you need external assistance in getting an estimate for the car insurance premium payable. This is where an online car insurance calculator plays a vital role.

If you want to know how a car insurance premium calculator works and how you can benefit from using it, you’ve come to the right place. In this complete guide, we will explore the advantages of using a car insurance calculator in India, the steps to use it, and more. Let’s get started.

What is a Car Insurance Calculator?

As the name suggests, a car insurance calculator is an online tool using which you can calculate the premium amount payable to protect your new or used car under a suitable insurance plan. The calculator is quite easy to use and only requires you to enter details like the make and model of your car, fuel type, variant, location of the RTO, purchase year, etc. to give you an estimate of the premium payable to buy the plan. You can also change these parameters to check how the car insurance policy premium varies under different circumstances. Similarly, you can check and compare premium-vs-benefits under plans offered by different insurance companies to make an informed decision.

Using a car insurance calculator, you can compare different types of insurance plans – both third-party liability and comprehensive, to check if they meet your coverage expectations and budget. In most cases, it is a free tool that is available online on official insurers’ portals and insurance aggregators.

Benefits/Advantages of Using a Car Insurance Premium Calculator

A car insurance calculator can be considered a reliable, valuable tool that can help in making the right decision to buy a car insurance policy. Given below are some of its primary benefits:

  • You can save a lot of your precious time by using an old or new car insurance calculator. It will instantly tell you the approximate premium payable for your car, based on which you can select a suitable plan.
  • It helps compare the premium rates and other variables as offered by different insurance companies, thereby making you select the best policy for your specific needs.
  • It also gives you the much-needed flexibility to compare plans and there will be no external influence of an agent that may affect your final decision.
  • A car insurance calculator also takes into account how the premium will vary on adding or excluding different car insurance add-ons.
  • It allows you to adjust different parameters like deductible, car model, IDV, etc. that affect the premium. You can try entering different values to these variables in the car insurance premium calculator to get a perfect combination.

How Does a Car Insurance Calculator Work?

In general, most car insurance calculators works on the following formula to calculate premium:

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

The final calculation of car insurance premiums depends on the type of plan and coverage you select, along with various other factors mentioned above. You should also know that:

  • The premium of third-party car insurance is fixed by the IRDAI and it mainly depends on the engine capacity of your car.
  • You can also purchase standalone Own Damage (OD) car insurance or comprehensive car insurance, the premium of which will vary from one insurer to another.

Let us understand how to calculate car insurance premiums with the help of an example –

Mr. Mehta wants to buy a car insurance policy for his new Honda Accord which has the following details:

  • Fuel Type: Petrol
  • Registration City and Year: Delhi and 2020
  • Engine Capacity: 1190 cc
  • NCB: 10%
  • Policy period: 1%

Using an online car insurance calculator, Mr. Mehta can get an estimate of the premium payable for a third-party insurance plan, a standalone OD plan, and a comprehensive insurance plan.

What are the Details Required to Use a Car Insurance Premium Calculator?

  • Car model
  • Registration year
  • RTO details
  • Car variant
  • Car manufacturer
  • Claim details if filed
  • Fuel Type
  • NCB 

Also Read: All About NCB in Car Insurance

How to Use a Car Insurance Premium Calculator Online?

Every insurance provider can ask for unique steps to be followed to access its car insurance calculator. Given below are the common steps involved to calculate car insurance premiums online:

Step 1: Select the model, brand, variant, and fuel type of your car

Step 2: Select the location where your car is registered 

Step 3: Select the year when you purchased the car

Step 4: Confirm whether you have filed any claim in the previous year or not

Step 5: Select the type of policy you want to buy – third-party liability only, standalone OD, or comprehensive car insurance

Step 6: Click on the ‘Calculate’ button to get an approximate premium amount

New Car Insurance Premium Calculation

The steps involved to calculate the premium for a new car are the same as above in most cases. However, some insurers may also ask for some other details like:

  • Car manufacturer details
  • Year of manufacture
  • Car model 
  • Car variant

Used/Old Car Insurance Premium Calculation

In the case of a used car, the insurance premium calculation steps may also include or ask for the following steps:

  • Existing car insurance policy if any
  • State and city of the car registration
  • NCB or previous claim reports if any

What are the Factors That Affect Car Insurance Premium Calculation?

Buying third-party car insurance is a mandatory requirement in India and its premium is calculated based on various factors that can significantly impact the cost of your insurance policy. Here are the key factors that influence the car insurance premium in India:

  • Type of car: The make, model, and manufacturing year of your car play an important role in determining the insurance premium. Newer and luxury cars are often costly to insure due to their high value and the cost of replacement parts.
  • Age and driving experience: Younger and less experienced drivers tend to pay higher premiums due to their higher risk of accidents. The age of the driver and the number of years they have been driving can impact the premium.
  • Location: Car insurance premiums can vary from city to city. Urban areas with a higher frequency of traffic, accidents, and theft tend to have a higher premium as compared to rural areas.
  • Claims history: A person’s claims history is taken into consideration when determining their insurance premium. Individuals with a history of accidents or claims are considered to be at higher risk and are likely to pay higher premiums.
  • Add-on covers: Car insurance policies can be enhanced with additional coverage options like personal accident cover, zero depreciation cover, etc. These add-on covers can increase the premium but can provide additional protection to the policyholder.
  • Fuel type: The premium payable for regular diesel or petrol-run vehicles is less than the ones with CNG-fitted kits.
  • Insured Declared Value (IDV): IDV refers to the maximum amount your insurer will pay in case of total loss or theft of the vehicle. It depends on the car brand, the car’s selling price, vehicle model, RTO details, etc. 
  • Car’s Manufacturing Year: Old cars have lower IDVs which is why their insurance premium will be comparatively lesser than new cars.
  • No Claim Bonus (NCB): NCB is provided to you for the number of years during which you did not file any car insurance claim.
  • ARAI-approved theft device protection: If you get an ARAI- approved theft device installed in your car, you can get an additional discount on the premium rates.

Also Read: Statistics Related to Car Insurance Industry in India

How To Reduce Car Insurance Premium?

  • Compare quotes 

Shopping around for car insurance quotes from multiple insurers can help you find the best policy for your needs at a lower cost.

  • Opt for a higher deductible

A deductible is an amount you pay out of pocket before insurance kicks in. Choosing a higher deductible can reduce the premium, but you’ll need to be prepared to cover the deductible amount in case of an accident.

  • Maintain a good driving record

A clean driving record with no traffic violations or accidents can make you eligible for discounts on your insurance premium.

  • Choose the right coverage 

Make sure you only pay for the coverage you need and avoid paying for coverage you don’t require. For instance, if your car is older, you may not need a zero-depreciation policy.

  • Install safety features 

Installing safety features such as airbags, anti-theft devices, etc. in your car can make you eligible for discounts and reduce your car insurance premium.

  • Avoid raising claims for minor damages

When you raise small claims for minor car damages, you lose the NCB benefit that can provide a discount on the car insurance renewal premium. Therefore, choose to pay for small repairs by yourself to save the NCB.

  • Know about the NCB transfer

As a car insurance policyholder, you should know that you are eligible for NCB benefits as per IRDAI regulations if you haven’t raised any claim in the previous year(s). You can get the NCB transferred at the time of buying a new car or a new car insurance policy.

  • Renew your car insurance policy timely

Failing to renew the policy on time can lead to cancellation of your policy and you will ultimately need to pay a higher premium to buy a new policy.

  • Buy car insurance online

Purchasing car insurance online is more cost-effective than buying it offline through an agent. You can compare policies, use an online car insurance premium calculator, and select the one that fits your budget and needs. 

By considering these steps, you can save money on your car insurance premium and get the coverage you need. However, it’s important to remember that the cheapest policy may not always be the best option, so be sure to carefully compare policies and understand the coverage they offer before making a decision. Use a car insurance calculator to check how the premium varies as you change the value in different parameter fields. 

Car Insurance Calculator FAQs

  • What is a car insurance calculator?

A car insurance calculator is an online tool that can help you estimate the cost of your car insurance premium based on various factors such as the make and model of your car, location, age, driving history, and coverage options.

  • How accurate are online car insurance calculators?

The accuracy of a car insurance calculator depends on the information you provide. The more accurate the information, the more accurate the estimate will be. Keep in mind that the calculator is only an estimate and the actual premium may vary based on other factors not considered by the calculator.

  • Can I buy car insurance directly from a calculator?

No, you cannot buy car insurance directly from a calculator. The calculator is only meant to provide an estimate of the premium. To purchase insurance, you’ll need to contact an insurance company or an insurance agent.

  • Do all insurance companies use the same calculator?

No, each insurance company may have its own unique car insurance premium calculator or method for determining the premium. This is why it’s important to compare quotes from multiple companies to find the best coverage and cost.

  • Can I use a car insurance calculator to compare quotes from different insurance companies?

Yes, you can use a car insurance calculator to compare quotes from different insurance companies. However, keep in mind that the calculator is only an estimate and the actual premium may vary based on other factors not considered by the calculator. It’s best to get quotes from multiple companies and compare their coverage and cost to find the best policy for your needs.

  • How often should I use a car insurance calculator in India?

It’s a good idea to use a car insurance calculator annually or whenever you make a significant change to your car or coverage, such as purchasing a new car, moving to a new location, etc. This will help you ensure that you’re getting the best coverage at the most affordable price.

 

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