Does car insurance premium change by state in India? – Advisor Forbes INDIA

The car insurance premium is one of the most important factors considered when purchasing a car insurance policy. Insurance companies arrive at this rate by considering many factors, which directly or indirectly affect car insurance premium rates.

For example, your age, the model of your car, its engine size, the age of the vehicle, have a huge impact on your car’s premium rates. Likewise, where you live and where your car is registered also have a significant influence on the premium you have to pay for car insurance coverage.

So yes, car insurance rates vary from state to state, often by a few hundred or sometimes even thousands of rupees.

Understanding car insurance premium

Before we delve into how a car insurance premium varies according to different states or geographical regions of India, let us first understand the basics of auto insurance premium. It is an amount that the car owner or the insured regularly pays to the insurance company for the purchase of a car insurance policy, which in turn provides financial protection for your vehicle. four-wheeler from physical damage or injury resulting from collisions. and against the liability of third parties.

A car insurance premium is affected by many different factors such as:

Car type: The engine displacement (cc) of the vehicle is one of the major factors that determines the premium for car insurance coverage. The higher the cc of your car, the higher the premium will be.

Vehicle age: More coverage is needed for the new car compared to the old car. As when the new car is damaged, the repair cost is usually higher.

Fuel type: The CNG car demands a higher premium because the maintenance cost is quite high compared to any gasoline or diesel car.

Insured Declared Value (IDV): The IDV is the current market value of the vehicle, the value of which is further administered by depreciation. As with a higher IDV, the premium increases and vice versa.

Type of cover: Third party premium is compulsory, which does not concern personal damage, but if someone opts for comprehensive insurance, the premium is comparatively higher and varies from insurer to insurer according to various discounts and tariffs that they offer. And, if add-ons were purchased with full coverage, premium rates increase accordingly.

Finally, location of the car registration: Where your car is registered plays a crucial role in determining your car insurance premium. So, if someone lives in an urban area or in a highly populated city or metropolis, the premium rates would be higher. For the simple reason that in these areas there is a higher risk of claims due to traffic, congestion, vandalism and other issues.

Now, let’s understand in depth how different premiums are charged according to different geographies.

State-Wise Auto Insurance Premium Changes

According to the insurance regulator of India, the Insurance Regulatory and Development Authority of India (IRDAI) has divided the various regions and sub-regions of India into two geographical areas: ZoneA and B-area

ZoneA consists of eight major Indian cities such as New Delhi, Mumbai, Bengaluru, Ahmedabad, Hyderabad, Kolkata, Chennai and Pune.

AreaB includes the rest of the country.

Car insurance premium is higher in cities belonging to zone A compared to zone B, due to higher population and heavy traffic, as these factors make your car more vulnerable to risk.

Auto Insurance Premium Rates for Different Locations

The premium rates for the different geographical areas have remained unchanged since June 30, 2022 in accordance with the Motor Vehicle Act. The table below presents the car insurance premium rates for the two geographical zones, Zone A and Zone B, according to the age of the vehicle and the engine capacity.

Premium rate for zone A

Premium rate for zone B

(Source: India Motor Tariff, 2002)


So next time remember that even if you change cities across India, your car premium rates may fluctuate depending on the area you are in. Also note that there won’t be much difference in premium if you moved to a neighboring locality. But if you move to another Indian state, your car insurance premium will definitely be revised.

Read our article to learn more about the best auto insurance policies available in India.

Frequently Asked Questions [FAQs]

I am staying in a Tier 2 city, will my premium change if I move to New Delhi?

Yes definitely. Tier 2 cities belong to zone category B, which has comparatively lower premium rates compared to zone A, to which New Delhi belongs.

Is my address an important factor in car insurance?

What is IDV in car insurance?

When calculating the car premium via the online insurance premium calculator, do I also need to submit my location details?

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