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Insurance Article

Understanding premium payable for car insurance in India

December 09 2012

To remain prepared against such untoward incidents, it becomes important to buy a car insurance policy. According to the Indian law, it is compulsory for every car to have at least the minimum insurance coverage and ensure an annual renewal of the insurance policy. Hence, buying a car insurance policy is not only monetarily beneficial but will also keep you in line with the law.

When looking to buy car insurance in India, it would be beneficial to purchase one which offers greater coverage than the required minimum. This is because a comprehensive insurance will help you cut down costs to a considerable extent in case your insured vehicle undergoes damage due to an accident. You may also at times have to bear costs for towing charges, medical expenses incurred from injury to you, co-passengers or pedestrians and at times legal expenses as well.

The premium amount is the deciding factor when it comes to selecting an insurance policy for your car. To get in-depth information about a prospective policy, you can now log in to the company’s website and get quotes about insurance policy structures. These quotes will give you an exact idea about the premium to be paid for the policy according to the cover chosen by you.

The premium for your car is split into three sections and is calculated as follows:
The premium cost for Third Party Risk (TP) cover is decided by the Insurance Regulatory and Development Agency (IRDA) and is the same for all companies providing car insurance in India. (The TP covers permanent injury or death of a person by your insured car as also any damage to the property of another by your insured vehicle.) Personal Accident (PA) cover can be included in your policy with the addition of a small amount to the total premium payable.

The PA insurance gives coverage for death or disability caused to the driver-owner due to an unfortunate accident and the amount paid depends on policy terms. Own Damage (OD) is the amount payable by the insurance company for coverage against man-made or natural calamities. Premium payable for the OD cover can be structured as per your preference and is calculated by multiplying the OD rate (different for different companies) with the Insured Declare Value (IDV). The IDV of a four-wheeler reduces annually and is calculated according to a standard chart.

With the above points in mind, gathering information about insurance policy for your automobile should be fairly easy so that you are always prepared for any exigency that may arise.

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