Does Geographical Location Affect the Car Policy Premium?

When it comes to protecting our four-wheelers, car insurance policies play a crucial role. With the ease of car insurance online, protecting our vehicles has become more accessible than ever. However, it is important to understand the various factors that influence car insurance policy premiums, and one intriguing aspect is the impact of geographical location.

Does where you live affect your car policy rates?

Let us see how your 4 wheeler insurance premiums are affected by where you live.

The Impact of Geographical Location on Car Insurance Premiums 

The location where your car is registered is a significant factor considered by car insurance companies when calculating premiums.

• Typically, car owners register their vehicles at the nearest Regional Transport Office (RTO), and any change in residential location can result in a change in car insurance premiums.
• However, if you move to a nearby locality within the same region, the impact on premiums is generally minimal.
• On the other hand, if you migrate to a different Indian state, your car insurance premium will be revised to reflect the new location's specific risk factors and insurance regulations.

Insurance Zones in India

The Insurance Regulatory and Development Authority of India (IRDAI) classifies various regions in India into insurance zones, known as Zone A and Zone B:

• Zone A typically includes major metropolitan cities like Mumbai, Bengaluru, Kolkata, Pune, Ahmedabad, Hyderabad, Chennai and Delhi.
• Zone B encompasses the remaining parts of the country, including rural areas and smaller towns.

Understanding the Impact of Insurance Zones on Car Insurance Premiums

One of the major factors for the difference in four wheeler insurance premiums based on insurance zones is the likelihood of a claim.

• Urban cities have higher population density and a larger number of vehicles, resulting in increased traffic congestion and a higher probability of accidents.

• The higher population and traffic density in urban areas increases the risk involved in insuring a car, leading to higher premiums.
• Higher premiums for 4 wheeler insurance are intended to cover the elevated risk associated with insuring vehicles in densely populated areas.

Factors Affecting Car Insurance Premium

Apart from location, there are several factors influence car insurance premiums, aside from insurance zones:

1. Car's age: As cars age, their value decreases, resulting in lower insurance costs. The premium for insuring a brand-new car is typically higher than that for an older car.

1. Brand: The cost or ex-showroom price of cars varies across different brands. The brand of the car affects the car insurance premium due to variations in the base value.

1. Type of car insurance: The most popular types of car insurance policies include third-party liability, own damage policy and comprehensive policy. The type of car policy chosen determines the insurance premium amount.

1. Add-ons: Add-on covers are additional services or benefits that enhance the car insurance policy. The more add-on covers selected, the higher the premium amount.

1. Claim history: The number of claims filed in the previous car insurance policy period affects the NCB received. NCB is a discount on car policy premiums, which increases with consecutive claim-free years.

1. Insured Declared Value (IDV): The current market value of the car, represented by the IDV, is a crucial factor in premium calculation. In the event of severe damage, the insurance company compensates based on the IDV of the car.

In conclusion, geographical location plays a significant role in determining four wheeler insurance premiums. Individuals must understand and analyse the influence of geographical location on their car insurance policy. By utilising car insurance online platforms and tools, individuals can conveniently compare premiums, explore different coverage options, and tailor their four wheeler insurance policy to their specific needs.