Updated on 3 Nov 2025
Car insurance policies are mandatory for every vehicle owner in India. It keeps them protected from various financial burdens, damage, etc. However, did you know that the type of vehicle you own can have an impact on the insurance premium? In this blog, you will gain a deep insight into the average price of a car insurance policy based on the vehicle type.
Understanding how your vehicle type impacts car insurance cost?
Car insurance rates vary by vehicle type in the following ways:
- Sedans are recognisable by their widespread use and are considered safer and more stable, with relatively low premiums. Third-party liability insurance costs are between INR 5,000/- and INR 10,000/-, and comprehensive coverage costs are between INR 10,000/- and INR 20,000/-.
- SUVs are known for their durability; therefore, their premiums—from INR 7,000/- to INR 15,000/- for third-party and INR 15,000/- to INR 30,000/- for comprehensive coverage—are higher, given the apparent risks involved.
- Popular for being the most reasonably priced, hatchbacks have the cheapest premiums, ranging from INR 4,000/- to INR 8,000/- for third-party and from INR 7,000/- to INR 15,000/- for comprehensive coverage.
- Luxury automobiles are expensive; hence, they command hefty premiums that range from INR 8,000/- to INR 18,000/- for third-party liability and INR 10,000/- to INR 25,000/- for comprehensive coverage.
Yet another type of car insurance is available, called temporary VIN insurance or chassis number insurance. This type facilitates you to buy the necessary insurance to register your vehicle, following which you can apply for permanent insurance. This insurance type is typically applicable for imported or custom-built cars.
Factors that influence car insurance cost
Apart from the vehicle, several other aspects can have a massive effect on the cost of the vehicle policy in India. This includes the following:
- The car’s model and age
- Age and gender of the owner
- Engine size (cubic capacity)
- Fuel type (electric/diesel/petrol)
- Location of registration
- Claim history
- Type of insurance coverage (comprehensive or third-party)
- Add-ons, such as roadside assistance, zero depreciation, etc.
Breakdown of premium components
In India, comprehensive car insurance premiums generally include 18% GST, a mandatory third-party premium and an own-damage premium covering the insured vehicle. Optional add-ons like engine protection or zero depreciation may raise the cost. However, discounts such as No Claim Bonus (NCB) and other offers can reduce the final premium.
How vehicle type affects risk profile
Faster and larger vehicles are viewed as higher risk by insurance firms. For instance, a luxury sedan or an SUV is more expensive to repair and is more likely to be damaged or stolen. This increases the risk for insurance firms, so they charge more. On the other hand, a small electric or hatchback has lower repair costs and might be considered much safer, which leads to lower premiums.
Cost difference by fuel type
Fuel type plays a role in determining vehicle insurance costs. Petrol vehicles normally have lower premiums. Diesel vehicles usually cost more to insure because of their higher engine capacity.
Electric vehicles generally have higher insurance premiums due to their expensive components, especially the battery. However, they may qualify for special discounts under government policies.
How to reduce your insurance premium
When you want to lower the insurance premium, the following tips will help:
- Pick a higher voluntary deductible
- Install all the anti-theft devices
- Avoid frequent or small claims
- Compare the insurance policies online
- Renew the policy on time to avoid penalties
- Drive safely to earn NCB (No Claim Bonus)
Conclusion
Your vehicle type plays a massive role in determining the car insurance premium. Whether you have a premium SUV or a simple hatchback, knowing how insurance costs are calculated can help you make wise financial decisions. To explore your options and receive tailored advice, fill out the form on this page and get expert support for choosing the right car insurance online.
FAQs
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Does the vehicle’s shade affect the insurance premium?
No. In India, a car’s colour will not have an impact on the insurance premium.
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What is NCB (No Claim Bonus)?
NCB is a discount provided for not making any claims during a policy year. It can go up to 50% over time.
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Is it possible to transfer an online policy to a new vehicle?
Yes. You can easily transfer your current insurance policy to your new car by informing the insurer and updating the vehicle information.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.