In India, the Motor Vehicles Act of 1988, the third-party insurance is mandatory. It guards against monetary obligations resulting from unintentional harm your vehicle causes to someone else's life or property. It is critical to precisely calculate the required third-party liability premium when buying auto insurance so that you can budget for it.
Read on to learn about various factors affecting third-party premium calculation and the step-by-step process for calculating the estimated premium cost yourself.
Components of third-party car insurance premium
Third-party liability car insurance plans offer comprehensive coverage to vehicle owners. The policies provide financial protection against legal liabilities arising from accidental bodily injury, death, or property damage caused to a third party. The IRDAI sets standardised premium rates based on engine capacity, making the plans economical.
Being a mandatory requirement under the Motor Vehicles Act, these plans offer extensive coverage for third-party liability and benefits like online purchases. Additional features may include cashless repairs at networked garages for own damage claims under comprehensive car insurance plans, making the process smooth and convenient for the vehicle owner.
Key factors that impact your third-party premium
While the IRDAI fixes the base premium rates for liability only and personal accident cover, the final premium you pay also depends on the following:
1. Cubic capacity (CC)
Cars with higher cubic capacity typically have higher engine power and speed capacity. Thus, the risks of severe damage and fatal accidents are higher. IRDAI sets higher liability premium rates for cars with bigger engine CC accordingly.
2. No Claim Bonus
If you had a claim-free before the policy year, you can get a No Claim Bonus (NCB) on your TP premium. The NCB offered ranges from 20% to 50% and is provided as a discount on TP premium renewal.
3. Add-on covers
You can expand the protection of our third-party policy by opting for add-on covers. These covers provide extra protection by including compensation for legal costs to defend claims or wages lost by your injured driver. Choosing these optional add-on covers increases our total premium but gives broader coverage in case of an unfortunate accident.
Step-by-step guide to calculate your third-party premium
Follow these steps to accurately estimate the cost of your car's mandatory third-party insurance premium:
- Check your car's engine's cubic capacity (CC) per the registration certificate. Then, look up the applicable base TP premium rates for that CC category and your geographical zone per the IRDAI.
- If opting for additional legal liability covers, check the respective premium rates set by IRDAI and add them to arrive at the total liability premium amount.
- If renewing your existing TP policy after a claim-free year, identify your applicable No Claim Bonus percentage (up to 50%) and calculate the NCB discount on the total liability premium amount.
- Apply the GST rate, currently 18%, on the final TP car premium amount after deducting the NCB discount, if any.
- Your estimated total third-party car insurance premium = Total Liability Premium - NCB Discount + GST
Use a car insurance calculator
The vehicle insurance premium calculator is an online tool that makes evaluating your possible insurance expenses simple and quick. Leading insurers offer calculators on their websites to provide customised quotes to customers. Here is how their customer-friendly car insurance premium calculator works:
- Select car make, model, variant, and fuel type.
- Enter the registered city and year of purchase.
- Specify any claims in the previous policy term.
- Click 'Calculate' to get an estimated premium and applicable IDV.
After factoring in essential criteria, this online calculator provides instant quotes for old and new cars. Without relying on agents, users can decide on optimal car insurance coverage according to their budget and needs. The transparent and convenient process enhances the purchase experience.
Benefits of car insurance calculator
Here are a few advantages of using a Car Insurance Premium Calculator for third-party insurance prices:
1. Easy premium comparison
A car insurance calculator helps you quickly compare quotes across various plans from different insurers. You can enter your car details once and get customised premium estimates. This saves time versus contacting multiple agents.
2. Understand IDV impact
You can tweak your car's Insured Declared Value (IDV) with the calculator to instantly see the change in premium. A higher IDV means a higher premium, and vice versa. This helps you choose an optimal IDV to balance premium and coverage.
3. Evaluate add-on covers
Add-on covers involve extra premiums. The calculator shows premium change when you select optional add-ons like zero depreciation or engine protector. You can evaluate if the extra premium for a particular add-on is worthwhile.
4. Quotes for new & old cars
The calculator provides instant quotes for both new and old cars. Factors like depreciated IDV and No Claim Bonus can be accounted for used vehicles.
Conclusion
Accurately estimating your third-party car insurance premium involves considering key factors like cubic capacity, NCB discounts, and add-on covers. Using online calculators simplifies this process and helps make an informed purchase decision. With just a few taps on your screen, You can buy affordable third-party car insurance plans online and enjoy a seamless claims process.
