How is your car insurance premium calculated?
Introduction Buying a car insurance policy is one of the most important financial decisions a vehicle owner can make. While many car owners focus primarily on finding the lowest premium, understanding how car insurance companies calculate premiums can help you make smarter choices, select the right coverage, and potentially save money. A car insurance premium is not just a random number — it is the result of a detailed risk assessment process. Insurers evaluate multiple factors to determine how likely your vehicle is to face a loss and the potential cost of that loss. By understanding these factors, you can optimize your coverage, make informed decisions, and ensure a smooth claims experience. 1. Type of Car Insurance Policy The type of car insurance policy is one of the first determinants of your premium. · Third-Party Liability Insurance: Mandatory under Indian law, it covers damages to others caused by your car. This is the most basic coverage, so the premiums are relatively...