Does Car Insurance Price Vary in Different Regions in India

You and your relative living in two different cities decided to buy the same car insurance policy from the same insurance company. You bought them with the same coverage and at the same amount. However, when it comes to paying the premium, they were different. You couldn’t guess the reason why you had to pay more premium for the same policy while your relative was paying quite less than you. The insurer explained to you the reason saying that the car insurance premium depends on different variables including the location where you have registered your vehicle. So, now you know that your relative is paying less premium for the same insurance because he has registered his car in a tier 2 city, whereas you live in metro city and have registered it there. Let us discuss this concept in detail in this blog.

Why do Car Insurance Premiums Vary as Per Region?

The price of a car insurance policy depends on varied factors including the location of the vehicle, or the place where you reside and have registered the vehicle. So, as per the geographical location of the car, the motor insurance will differ accordingly. Be it a new car insurance or car insurance renewal online, these factors do have an influence on the policy premium.

For instance, you are working in Delhi and your brother is in Guwahati. Now, if you both buy the same policy from the same insurer for your respective cars, you will have to pay more premium than your brother. This is because you have registered your car in Delhi, which is a city with more traffic compared to Guwahati. And with traffic comes enhanced liability of the insurer as your car becomes prone to accidents, damage, theft etc. Thus, you pay a higher car insurance price in India in terms of premium as compared to your brother.

Zones of Car Insurance in India

As per IRDAI, India is divided into two Zones namely A and B based on which a four-wheeler insurance premium is decided in the country. Zone A features the tier 1 cities or the metropolitan cities like Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, and Pune. Zone B includes the rest of the cities. Thus, depending on which zone your car is registered, the car insurance policy premium of your vehicle varies.

Factors Affecting car insurance rate calculation for varied zones

Insurers take into account two major factors to calculate motor insurance rates other than the location. The factors are – age of the car or how old the car is, and the cubic capacity of the engine. The insurers also take into account IDV or Insured Declared Value (which is the current market value) of a car to calculate the amount of premium to be paid for a car registered in a particular zone.

1. Zone A premium

‘Zone A’ cities being highly populated locations with heavy traffic are areas prone to mishaps as compared to cities in Zone B. Hence, four wheeler insurance prices in these locations are high as the insurer has more liability in such places.

2. Zone B premium

In case of Zone B cities, the situation of being accident prone is less as compared to Zone A as these cities are less crowded.  So, here the comprehensive premium price levied on your best car insurance in India is less.

5 Other influencing factors that affect Vehicle Insurance Premium

1. Car Model and Make – This is another factor that affects the price of a four-wheeler insurance policy. A luxurious high-end car will have more premium as compared to regular cars.
2. Type of Coverage – The coverage you want to have for your car also influences the price of your car insurance premium. In case of a third-party policy, the premium is less as compared to comprehensive or own-damage car insurance policies.
3. Add-On  Covers – As in the above case, if you buy extra cover in the form of rider/add-ons for your car with your car insurance online to have extra protection, even in that case you will have to pay a high premium.
4. Safety Features – Your car insurance might reduce if you install enough safety features in your car. This is because these anti-theft features reduce the liability of the insurer, which help in reducing the premium.
5. Voluntary Deductibles -Similarly, opting for deductibles might also help in reducing the premium of your car insurance policy. So, if you seek to pay a voluntary deductible during claim settlement, you might have to pay a low premium price.