How to Calculate Car Insurance Premium

Car insurance is like a safety net for your car. However, to avail yourself of the benefits of that safety net you need to pay a certain amount, called the car insurance premium, to the insurance company. 

In return, a car insurance policy financially protects your car in case it gets damaged in an accident, stolen, or faces other problems, as the insurance company helps cover the costs. It also helps if you accidentally hurt someone or damage their property while driving. 

However, this car insurance price is determined by various factors, such as the car's make and model, IDV, policy discounts, location where you drive the car, driving history, and more.

Want to know how to calculate car insurance premium formula? Here it is:

IDV Calculation Formula

Car Insurance Premium = Own Damage Premium - (NCB + Discounts) + Third-party Liability Premium

However, if you want an easier way out, you can use the IDV calculator for car online by Digit and get the right insurance for your car! Here’s how you can use the car insurance calculator online to calculate your premium:

Step 1 - Enter your car’s make, model, variant, registration date and your city.

Step 2 - Click on ‘Get Quote’ & choose your plan.

Step 3 - Choose between a Third-Party Liability Only or a Comprehensive Package.

Step 4 - Tell us about your last insurance policy- Date of Expiry, Claims Made & No Claim Bonus Earned.

Step 5 - You will now see your car insurance premium on the bottom right of the loaded page.

Step 6 - If you’ve chosen a Standard/Comprehensive Plan, you can set your IDV and customize your plan further by selecting add-ons like Zero Depreciation, Return to Invoice, Gear & Engine Protection and more.

Step 7 - You will now see your final car insurance premium calculated on the right side of the page. 

To compare car insurance quotes online and get the best car insurance policy, consider the following things:

• IDV - Many online car insurance quotes offer a low Insured Declared Value (IDV), which is the market value of your car. If the IDV is too low, you might be at a loss when making a claim. Thus, it's important to set the IDV at the right value.

• Service Benefits - Go for an insurance company that offers a good after-sales service like Digit, which offers doorstep pickup, repair and drop with 6 months warranty, 24*7 customer care support, cashless at 6000+ garages, and more such features.

• Claim Speed - Always choose an insurance company that has a good record of settling claims. Digit's claims are fast and hassle-free, plus we have a Zero Hardcopy policy i.e. we just ask for soft-copies, completely paperless claims!

Here are some useful tips to lower car insurance premium:

Increase your Voluntary Deductible

If you are confident enough in your driving, then you can opt for voluntary deductibles where you agree to pay a part of the claim cost because the higher deductibles, the lower the car insurance price.

Choose Relevant Add-Ons Only

Add-ons are a great way to add an extra layer of protection to your car; be selective about the car insurance add-ons you choose. Each add-on comes at some minimal additional amount, which increases your car insurance premium. Therefore, it’s better to opt only for add-ons that are relevant to you and your car.

Renew Your Policy on Time

Always renew your car insurance policy before its expiry date to avoid any penalty or the higher car insurance costs associated with policy lapses. 

Limit Coverage for Older Cars

If you own a car that is older or rarely used, you can go for third-party liability insurance instead of a comprehensive policy, as such cars generally require minimal protection, and a third-party cover is relatively cheaper.

Set Up Safety Devices in Your Car

If your car is equipped with safety devices such as anti-theft systems, then your insurer may offer discounted premiums as these devices reduce the risk of car theft or damage.  

Maintain a Good Driving Record

This is an important tip as a clean driving history with no accidents or violations can lead to discounts from your insurance provider because it indicates lower risk. This will also reduce your claims, and you can get a No Claim Bonus each year.