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How is the premium calculated on my vehicle?

The premium on a vehicle is calculated on the type of vehicle, its IDV, city of registration, period of coverage, and claims history.

Apnainsurance.com Research Bureau

27 Nov 2007

Typically, insurance premium rates are determined by the type of your vehicle, its Insured Declared Value (IDV), the city of registration, the period of coverage, and claims history.

The IDV is determined by the age, brand and model of your vehicle. The IDV determines the premium for your vehicle. The IDV is the sum that is paid to you in the event of theft of the vehicle or the vehicle is totally damaged and beyond repairs in an accident.

Another fact is that premium is calculated only on the cubic capacity of the vehicle. There is no consideration at all for those advanced technology and safety features in your vehicle (although some discount is available for the installation of an anti-theft device).

Another factor is claims history - If you have a bad claims history, you could be loaded with a higher premium on renewing the car insurance policy.

On the other hand, if you have been a cautious driver with a claims-free record, you are eligible for increasing discounts in your second, third, fourth years, leading up to the maximum discount of 50 per cent on premium in your fifth policy year. But...if you file even once for a claim in those five years, your discount on renewal goes to nil, not to the previous year's premium levels. Of course, by the fifth year of ownership, it makes more sense to take out a Third Party Only policy - the reduction in the value of the vehicle and depreciation will make comprehensive cover too expensive and unnecessary.

See also:

What motor insurance covers vs. What it excludes

What is the amount I need to insure my vehicle? / What is IDV?

Does the motor insurance policy automatically cover all my high-cost accessories such as music system, extra fittings, etc?

Can the insurance premium on my vehicle be reduced?

What is Malus?

What is No Claim Bonus?

Voluntary Deductibles and Compulsory Excesses

Motor Insurance FAQs on Claims

Motor Insurance FAQs on Coverage

Motor Insurance FAQs on Cost, Premiums, Bonus, Discounts, Renewals