Owning cars has become increasingly common in the current day. The convenience of having a comfortable personal vehicle at all times with great value-added features is something a lot of people have been enticed by. Apart from its mere value as a conveyance, car owners also have an emotional and financial attachment to their vehicles. This is why, when it comes to
buying car insurance, one does not wait. However, usually, people find it difficult to keep up with the increment in the premium of their car insurance every year. But why does that happen?
In this article, we will throw light on the various reasons why your car insurance premium hikes every year. Find out some hacks to avoid it with us. Let's dig in!
There are some specific reasons why some people find greater premium hikes than others. These factors are solely controlled by the car owner or the driver of the vehicle and can be controlled easily.
Some of the personal factors affecting insurance premiums include:Driving defaults: Some people take traffic and driving rules for granted. There are a lot of external factors that lead to poor driving while some are self-governed. Rash driving, driving without seatbelts, jumping traffic signals, etc can not only land you into legal trouble but also increase your insurance premium. Your car insurance company has a track record of all the road-related offenses committed with your car and hence increase the premium to cover for any potential damage to the vehicle due to driving defaults.Claims: If you claim your insurance quite frequently, you will be deemed as a risky profile by the insurance provider. Resultantly, your premiums will hike to cover for regular claims.Manufacturing: The components of your car model might have been discontinued which makes finding them very difficult; your car's IDV (insurance declared value) might be too high and hence repairs cost more. Such reasons contribute to increased premiums since covering for claims require more finances.
Apart from personal factors, there are some external elements that contribute to the increased premium of your car insurance. These factors are most likely to be out of the hands of the driver or car owner.
Here are some of such external factors:Location: If you live in an area prone to theft, accidents, or any such issue that may impact your car, your insurance premium will increase based on the likelihood of damage.
Third-party Insurance: according to the Indian government, liability-only insurance is mandatory for every vehicle on Indian roads. The price of this insurance is standard and is under the control of IRDAI. Since there is an increase in the price of this insurance, your overall premium is set to increase alongside.Car Age: If the vehicle is old, it is more vulnerable to damages and regular wear and tear. Due to this, the price of insurance increases to cover such claims.Driver's Age: A young driver will need to pay higher premiums than an older one due to the difference in road experience and the likelihood of damage.
Car insurance is not just an option but a mandate to protect your finances during a crisis. Make sure to add the right covers when you buy car insurance to get the full value of your claims.