In India, buying car insurance is mandatory by law. It is an illegal act to drive a car without valid car insurance whether it is a new car or a second-hand car. A car owner generally needs to pay an insurance premium on a yearly basis to validate the insurance papers. The insurance companies calculate the premium of a car based on a lot of factors like personal details of the car owner, car type, the number of coverages one selects, IDV (Insured Declared Value) etc. A person who owns a brand new Ferrari car would definitely pay a higher premium than a person who owns a Maruti Suzuki. One can calculate the insurance premium of his car using a car insurance premium calculator. Also, the premium of a second-hand car is different from that of a brand new. You can know more about car insurance premium from the link.
The insurance premium of a used car varies depending upon a lot of factors, they are:
- IDV of a car: IDV stands for Insured Declared Value. The IDV of a car is based on the present market value of it. It is the highest sum that would be paid to a car owner in case of a total loss of his vehicle. The IDV of a used car would decrease because of the rate of depreciation that is deducted from a car’s initial market value. Therefore, The lower the IDV, the lower will be the amount of car insurance premium but less coverage as well. A car insurance premium calculator can help one to do these calculations with ease.
- Type of insurance coverage: Amount of insurance premium is also affected by the type of coverage selected by a car owner. If you buy a used car which previously had a third party insurance cover only and you change it to take comprehensive insurance, the premium you would pay now will be higher.
- Car owner’s location: The place where a car owner lives matters when it comes to car insurance premiums. If the previous owner of your car lives in a different location than the new, the amount of insurance premium would change. A person living in a location that is prone to theft and road accidents pays a higher premium than others. You can use a car insurance premium calculator to know the difference.
- Car model and brand: The brand name and the model of your car would also affect premiums of your insurance. Big brand names provide better modified cars which are less worn and torn after usage. So, a used luxurious car will still have a higher premium than a new Maruti Suzuki. Therefore, use a car insurance premium calculator to find out your used car’s premium.
- Car Usage: The insurance premiums of a commercial vehicle and a private vehicle are different. If you buy a used private car for a commercial purpose, you will need to pay the charges that are applicable for a commercial vehicle which might be higher than the previous premium amount.
- Modification done to the car: The performance of a car’s engine and its fuel type also affects the amount of the insurance premium. If you wish to install a CNG cylinder in your second-hand car, you will pay a higher premium than usual.
- Security features of the car: The safety features of your car can help you avail a concession on your insurance premium. If you install advanced security features like anti-theft systems in your second-hand car, you might pay a lower premium. Car insurance premium calculators can efficiently help one to calculate premiums with ease.
Although it is mandatory to get valid car insurance, it has to be accepted that there are several benefits that are provided by insurance companies that are extremely useful. Be it a new or a used car, it is necessary to have an insurance cover for it. However, check all the factors that may affect the premium of the insurance policy, if you are purchasing a second-hand car.