If you have car insurance, you ought to pay a premium regularly to keep the plan active and avail its benefits. If you are wondering how much premium should you pay, read on to know how to calculate the premium using a car insurance premium calculator.
Today, owning a car is not just a status symbol but is a necessity. So, if you a car owner, you must keep your asset protected against all kinds of risks by buying a robust car insurance policy with sufficient sum insured. Also, having valid car insurance is a legal requirement. The insurance companies in India offer a variety of plans with varying premiums. So, how do you calculate the premium amount? You can use the car insurance premium calculator.
What is a car insurance premium calculator?
A car insurance calculator is an online tool that allows you to calculate the exact premium amount you must pay towards your plan. Today, almost all reputed insurance companies in India have online car insurance calculator on their website to help the potential customers determine the premium for the plan they choose.
How to calculate the premium using a car insurance premium calculator?
The method for calculating the premium depends on the type of car you drive.
Calculating the premium for a used car
If you drive a used for a second-hand vehicle, you must enter the following details in the calculator:
- Type of car
- Fuel type
- Existing policy details
- Car registration number
- Claims made
Once you enter the details, the calculator will automatically estimate the premium amount you must pay for the plan you choose.
Calculating the premium for a new car
If you drive a new car, the details required to know the premium are slightly different. For calculating the premium, you must enter the following information in the calculator:
- Car manufacturer’s name and year of manufacture
- Car model
- The city/state of registration
- Owner’s personal information (name, age, sex, occupation, income, etc.)
Based on the information you provide, the calculator will estimate the premium amount applicable to the policy you choose.
The formula for calculating the car insurance premium
No matter, if you wish to calculate the premium for a used car or a new car, the car insurance calculators use a standard formula to determine the premium amount payable. The formula is:
Premium – own damage premium – (no claim bonus + discounts) + liability premium as determined by the IRDAI + add-on cost
You can use the above formula to calculate the premium manually, but when you compute manually, there is always a risk of miscalculation or human error. Hence, it is better to use the calculator and avoid complex calculations. Apart from help you know the precise premium payable, using a car insurance premium calculator has several benefits, including:
- Knowing the exact premium payable beforehand allows you to plan your finances well to include the premium payment in your budget
- You can change the variables multiple time to arrive at a premium that is affordable to you. Also, you would know how different variables affect the premium rate
- It allows you to compare the premium prices of different plans and choose the best one to suit your needs and with affordable premium
- The calculator is easy to use; you can use it even with no technical knowledge and get results instantly
- It makes the overall insurance purchase process simple and convenient.
Now, that you are aware of the calculator works, it benefits and how you can use it to calculate the premium, make sure to use it to your advantage and get the best policy for your car.