Car insurance renewal is a crucial step to ensure continuous protection against damages caused by accidents, theft, natural disasters, or third-party liabilities. It is also legally mandatory to renew your car insurance policy as soon as it expires. However, renewing your policy without reviewing the details can result in overpaying by thousands of dollars every year. That is why it is beneficial to know how much car insurance renewal costs and the factors that affect your car insurance renewal premium. Continue reading to understand this to avoid paying extra and choose the best car insurance.
Key Factors that Influence Car Insurance Renewal Cost
The cost of renewing your car insurance depends on several factors. Common factors that affect renewal costs include the type of car insurance (third-party or comprehensive policy), the vehicle’s make, model, age, engine capacity, etc. Here are some of the common factors that impact your car insurance renewal cost:
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Type of Policy
Insurers offer various types of car insurance policies, including third-party insurance, comprehensive insurance, and zero-depreciation car insurance. Your renewal costs depend on the type of car insurance you choose, as each policy offers a unique set of coverage options. If you only opt for the standard third-party insurance, the renewal premium will be less than that of a comprehensive policy.
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Engine/Battery Capacity
The engine capacity directly affects the cost of your car insurance renewal. The third-party insurance premium remains the same across all insurers and is determined by the IRDAI based on the engine capacity and battery capacity of electric vehicles (EVs). For example, cars with a 1.5L engine have a higher premium than those with an engine size under 1.0L.
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Make, Model & Age
Renewal costs also vary based on the vehicle’s make, model, and age. Older cars have a lower IDV, which reduces the premium; in contrast, new or high-end cars have a higher IDV and a higher premium.
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Insured Declared Value (IDV)
The Insured Declared Value (IDV) is the current market value of your car. It is the maximum payout your car insurance company is liable to pay you in case of theft or total loss. The IDV of a new car is higher, and as the car ages, its IDV also decreases due to depreciation, thus reducing the car insurance renewal cost. Every year, the value of your car depreciates by 10% until the insured vehicle is 5 years old, and after that, the IDV is calculated by mutual agreement between the insurer and the car owner.
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No Claim Bonus (NCB)
The No Claim Bonus (NCB) is a discount offered on the own damage (OD) premium during your car insurance renewal for not raising any claims in the policy tenure. The NCB accumulates every year. It starts at 20% and can be up to 50% in the fifth consecutive claim-free year.
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Location
Your location also affects your car insurance premium due to the risks associated with factors such as traffic density, accident rates, and theft. This is the primary reason why cars used in metro cities or accident-prone areas have a higher renewal premium for the OD or comprehensive insurance.
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Add-On Covers
You can include several add-on covers with a comprehensive car insurance policy at an additional premium. Popular add-ons, such as zero depreciation, engine protection, roadside assistance, consumables, etc., enhance coverage but also increase the cost of renewing a car insurance policy.
Third-Party Car Insurance Renewal Cost
The IRDAI has fixed the rates for the third-party insurance based on the engine capacity of the insured car. You can check the table given below to know the prices for both 1-year and 3-year insurance:
| Engine Cubic Capacity (CC) | Third Party Insurance Premium for 1 Year | Third Party Insurance Premium for 3 Years |
| Less than 1000 CC | ₹2,094 | ₹6,521 |
| 1000 CC – 1500 CC | ₹3,416 | ₹10,640 |
| More than 1500 CC | ₹7,897 | ₹24,596 |
Third-Party Car Insurance Renewal Cost for EVs
The cost of renewing electric car insurance depends on the vehicle’s battery capacity. Check out the third-party EV car insurance renewal costs below:
| Battery Capacity (kW) | Third Party Insurance Premium for 1 Year | Third Party Insurance Premium for 3 Years |
| Up to 30 kW | ₹1,780 | ₹5,543 |
| Above 30 kW up to 65 kW | ₹2,904 | ₹9,044 |
| Above 65 kW | ₹6,712 | ₹20,907 |
Why is it Important to Renew Your Car Insurance on Time?
Whether you have a third-party plan or a comprehensive policy, it is very important to renew your car insurance on time. It not only helps you abide by the Indian Motor Laws, but also ensures continuous coverage, avoids policy lapse and break-in period, retains the accumulated NCB, and much more.
For example, imagine your policy expires on March 10, and you forget to renew it. Since your policy has lapsed, the insurer will offer you a grace period in car insurance. Additionally, if the break extends beyond the specified days, you will lose your NCB and end up paying a significantly higher premium during car insurance renewal.
Over to You!
Renewing car insurance on time helps you stay legally compliant while protecting your finances. You can easily renew your car insurance online on Policybazaar.com and compare plans and customise your coverage to find the best policy at an affordable cost. You can also use a car insurance calculator to estimate the own damage premium of your policy.
