How Insurance Premiums Differ Between Highway vs. City Drivers in India

Factors Affecting Car Insurance Premiums in India

Car insurance premiums in India are influenced by several factors. Varying driving environments and driving habits are integral factors in assessing risk. Let’s take a look at some factors affecting car insurance premiums:

Make, Model and Variant

The make, model and variant of the car play a crucial role in affecting the insurance premium. Insurance companies evaluate these factors to understand how expensive repairs and maintenance are for the vehicle, overall safety features, etc.

Risk Assessment

Insurance companies perform a risk assessment by evaluating factors such as a driver’s riding habits, history, and accident probability to understand the likelihood of them raising a claim. The higher the risk, the higher the premium.

Coverage that You Choose

• Standalone Own Damage Cover

Standalone own damage cover is a type of motor insurance that protects the vehicle against damage, such as accidents, theft, and fire. Premiums for this type of plan are primarily based on the vehicle’s IDV and overall risk.

What is IDV? IDV or Insurance Declared Value is the market value of the vehicle at the time of purchasing motor insurance.

• Third Party Liability

This type of motor insurance provides coverage for damages done to a third party or person by the insured vehicle. The insurance company factors in the risk of raising such claims to determine the premium.

Did You Know that, according to the Motor Vehicle Act 1988, purchasing third-party liability Insurance is mandatory for every motorised vehicle?

• Riders on Plans

Policyholders can opt for riders such as roadside assistance, daily allowance, and zero depreciation on their existing plan to enhance coverage. However, such riders come with a minimal additional premium.

Your Place of Residence/ Zone of Registration

The zone of registration for the car also impacts car insurance premiums. This is primarily because insurance companies evaluate the risk of accidents, the cost of repair, maintenance, etc, in different areas.

For instance, the chances of road accidents are higher in cities like Delhi or Bangalore due to heavier traffic, and so are the insurance premiums.

Deductibles You Choose

Car insurance policies with higher deductibles have lower premiums and vice versa.

What are Deductibles? A deductible under motor insurance is the amount policyholders agree to pay from their own pocket, and the remaining is taken care of by the insurer.

No Claim Bonus

Insurance companies offer exciting discounts on the premium in the following policy year for a claim-free year, known as No Claim Bonus. This can significantly lower the premium for your car insurance.

Motor Insurance Premium for City Drivers

Typically, insurance companies consider city drivers to have higher chances of filing claims, resulting in slightly higher premiums. Here are some factors that put city drivers in a high-risk category:

Density in Traffic

Major cities, such as Delhi, Bangalore, and Mumbai, have dense traffic that often increases the likelihood of minor accidents, including rear-end collisions and third-party damages. This increases the frequency of city drivers raising claims.

Stop-Go Driving Approach

Bumper-to-bumper driving, frequent braking, and acceleration put strains on the vehicle's engine, which can result in damage to the vehicle. Claims for maintenance and servicing increase.

Parking Challenges

Parking challenges for city drivers are not a new phenomenon. Parking the car in cramped spaces often leads to dents and scratches, resulting in a higher number of motor insurance claims.

Higher Frequency of Claims

Although the severity of claims for city drivers might be lower, the higher frequency of claims usually results in higher premiums as well.

Motor Insurance Premium for Highway Drivers

Motor insurance premiums for highway drivers are influenced primarily by the severity of claims rather than the frequency of claims. Here are some factors that influence the premium:

Speed and Fatal Collisions

Vehicles on highways often travel at high speeds, which, while reducing accident frequency, increases the severity of fatal collisions.

Lower Chances of Theft

Unlike city vehicles, theft or vandalism of highway vehicles is slightly lower. This reduces claims under standalone own damage cover, thus resulting in slightly lower premiums.

Repair and Assistance Challenges

Repairs and roadside assistance are a common challenge for highway drivers. While city drivers can easily find roadside assistance for instant repairs, highway vehicles are often left stranded for long stretches, resulting in severe damage.

Did You Know that IRDAI, the Insurance Regulatory and Development Authority of India, has divided cities into different zones that are to be factored in when determining premiums?

Manage Insurance Premiums: Tips for Drivers

Here are a few simple tips that can help drivers in different regions manage premiums for their motor insurance plan:

A Clean Driving Record

Maintaining a clean driving record to reduce your frequency of claims and enjoy No Claim Bonus benefits.

What is No Claim Bonus? No Claim Bonus (NCB) is a benefit offered to policyholders who do not raise any claims during a policy year.

Adoption of Security Devices

Many insurance companies offer additional discounts on premiums for vehicles equipped with security devices, such as anti-theft devices and GPS systems.

Smart Add-Ons and Riders

Riders can be appealing, but it is crucial to select them carefully. Select riders that meet your needs and enhance protection with a minimal additional premium.

Alignment in Policy and Usage

Depending on the type of driver you are and the frequency of your driving, choose a policy that aligns with your vehicle usage.

Opting for Voluntary Deductibles

Opt for voluntary deductibles to lower the premium amount, but ensure to choose deductible portions based on your financial comfort.

Summing Up

Premiums for motor insurance in India vary across the board. It changes based on several factors that help the insurance company assess the risk. While city drivers are usually considered to have a higher frequency of claims, highway drivers have higher severity of claims, which affects their premiums.

If your vehicle isn’t insured with a reliable plan, then trust Jio Insurance Broking to bring the best motor insurance plans that you can compare and choose.