Jul 27, 2017 10:19 AM IST | Source:

Little known facts about auto insurance and how premium rates are determined

Insurance providers today may claim to be the best, but it is important that you find your perfect combination of features before you buy auto insurance.

Little known facts about auto insurance and how premium rates are determined

Naval Goel

Even though we don’t realize this, but we spend a large amount of time inside our much-adored vehicles. These automobiles are a significant part of our lives today for they help us commute at a much faster and convenient manner. However, they are also prone to theft or accidents. It is important that we get insured to avoid any major losses that can happen to anyone due to their loss or theft or any accident. Auto insurance is not only a necessity but is a legal obligation as well.

Here is a list of lesser known facts about auto insurance that may intrigue you and can describe reasons that determine premium rates.

Trust only the best for your auto insurance: Insurance providers today may claim to be the best, but it is important that you find your perfect combination of features before you invest money in any of the auto insurances. Make sure the company you ally with is a reputed one and is accredited by IRDAI. Do check the claim settlement numbers - higher the better.

Only an expert insurance company holds the skill and knowledge required to address each person’s requirements and can then only prescribe suitable insurance policy with feasible clauses.

Personal items inside the vehicle at the time of theft are not covered by auto insurance policies: One must be aware of the fact that most auto insurance policies do not cover any of the items lying inside the vehicle at the time of the theft. Often people like to carry their expensive gadgets such as GPS device, Laptop or Camera, etc. While travelling and in the case of theft, they expect that they will be compensated for the loss of these products as well. Most policies don’t cover them, but many such items are covered under certain homeowner policies.

Your profession affects auto insurance premium rates too: While determining your premium rate your insurance company will even keep your profession under consideration. Insurance company consider professions such as delivery personnel, journalists, home take away profiles and others that require continuous travelling as high-risk profiles. Since they spend a higher number of hours on the road, their risk of facing accidents are considered to be higher. As compared to such profiles the professions that require a professional to travel less are considered to be lower-risk profiles, and hence their premium shall be comparatively lower.

Previous policy lapse case counts too: It may examine your previous automobile’s policy, and your premium may be largely affected by it. Therefore it is also important that you avoid any policy lapse case with all of your vehicles. Any default or lapse case in the past or with other vehicles is considered unfit by various insurance companies, and hence it is important that you pay attention to your premium due date every time.

Higher deductibles can cause lower premium: While determining the automobile insurance premium rate, the sole aim of an insurance provider is to find profiles where they wouldn’t have to or will have to pay the least amount of claims. Therefore they prefer profiles where clients agree to pay for a larger part of their damages by raising their deductibles. They thus end by giving lower premium to such profiles.

Other features that can avail you discounts: It is important that you research the whole thing and find out features that enable you to avail discounts on your premium before you invest in an automobile insurance. Various insurance providers avail great discounts for features such as a safe driving record, electronic payments, anti-theft devices, car safety features, payment in full and so on. Make sure you get your reward points depending upon your car’s condition and features.

Cheapest isn’t always the best option: Search scrupulously, and you can find out that cheapest option is not always the best one. While finalizing your automobile insurance you need to address two things one is your level of risk and second is the assets that need safeguarding. You do want to bag the best deal on your automobile insurance, but you would also want to ensure that the insurance provides you complete coverage for your valuables. Therefore, you need to strike a balance between the two while exploring your options.

Your automobile insurance is inevitable as it protects your hard-earned money during a state of crisis. Even though the insurance doesn’t claim to protect your vehicle what it does promise is the protection of your invested money in the event of any unforeseen damage. One can customize these automobile insurances and include various add-on covers in order to obtain greater benefits and maximum coverage.

(The writer is founder and CEO of
Follow us on
Available On