Does Car Insurance Premium Decrease With Car Age?

When do Car Insurance rates start to decrease?

In India, the Third-party Liability Car Insurance premiums are fixed by the Insurance Regulatory and Development Authority of India (IRDAI), and this is independent of your car’s age. However, if you choose to buy a Comprehensive Car Insurance policy with Own Damage (OD) coverage, the premium for it will reduce as your car gets older.

A car is a depreciating asset, and the steady decline of the value of the car’s parts over time results in a reduced IDV. Thus, the premium you pay for OD coverage decreases as well. Here is a standard chart for the depreciation rate for a car’s parts for IDV calculation:

The primary determinants of Car Insurance premiums that insurers concentrate on are:
 

Age of the Vehicle	Depreciation Rate
Less than 6 months	5%
6 months to 1 year	15%
1 to 2 years	20%
2 to 3 years	30%
3 to 4 years	40%
4 to 5 years	50%
Above 5 years	50% or market value basis

Vehicle type: Premiums are higher for cars with higher IDV.

Location: Insurance prices are higher in Zone A (metro areas) than in Zone B (rest of India) due to increased traffic congestion and accident hazards.

Engine capacity (CC): The own damage (OD) premium is directly impacted by a vehicle's CC; the higher the CC, the higher the charges.

 

Tips to Reduce Car Insurance premiums at any car age

Regardless of how old your car is, there are smart ways to reduce your Car Insurance premium:

Drive safely and keep a clean record

Accidents and claims can drive up your premium. Defensive driving helps maintain lower insurance costs.
 

Increase your voluntary deductible

Your premium may be reduced by raising your voluntary deductible—the sum you pay before the insurance company pays the remaining balance. In the event of a claim, just make sure it's a sum you can afford.
 

Install safety and anti-theft devices

Vehicles with anti-theft alarms are capable of getting discounts from insurers since these features lower risk.
 

Claim your No Claim Bonus (NCB)

A No Claim Bonus (NCB) is a discount provided by insurers for every claim-free year. It starts at 20% after the first claim-free year and can go up to 50% over five consecutive years. This discount applies to the OD premium of your policy, helping you save significantly on renewals. 
 

Compare policies before renewing

The cost of insurance varies according to the provider. Find the best bargain by comparing insurance companies online before renewing.
 

Avoid unnecessary modifications

Although high-performance engines and fancy spoilers may look fantastic, they might raise your Car Insurance costs. A lot of modifications make your car a high-risk vehicle, which raises insurance premiums.
 

Period of Car Insurance	No-Claim Bonus Percentage
No claim made during the preceding full year of Car Insurance	20%
No claim made during the preceding 2 consecutive years of Car Insurance	25%
No claim made during the preceding 3 consecutive years of Car Insurance	35%
No claim made during the preceding 4 consecutive years of Car Insurance	45%
No claim made during the preceding 5 consecutive years of Car Insurance	50%

 

 

What are the other factors affecting Car Insurance costs?

Besides vehicle type, location, and CC, here are a few additional factors that impact Car Insurance rates in India:

Coverage type: Third-Party Insurance provides less protection than comprehensive insurance but is less expensive.

Claim history: A claim-free record results in savings, while a history of frequent claims may raise your rate.

Policy add-ons: Although they increase the cost of insurance, policy add-ons like Roadside Assistance, Engine Protection, and Zero Depreciation enhance coverage.
 

Understanding these criteria will help you make more educated decisions and lower Car Insurance premiums in India.
 

Summing Up

Car insurance premiums do decrease as a car gets older, mainly because of depreciation affecting the OD premium. Your car’s IDV, your location, and the car’s engine capacity (CC) all play a crucial role in determining costs. Whether your car is old or new, there are always ways to lower your insurance costs.

Looking for an affordable and hassle-free insurance solution? Shriram Car Insurance provides competitive premiums, minimal paperwork, and valuable add-ons tailored to your needs. Regardless of your level of driving expertise, we have an insurance policy coverage that's right for you. Keep yourself safe, drive with assurance, and make full use of your insurance coverage!

 

FAQs

1. Does Car Insurance premium decrease with car age in India?

No, in India, car age has no bearing on Car Insurance costs. The IDV of the vehicle, location, and engine capacity (CC) are the factors that insurers use to determine rates.

 

2. What is the cheapest car age for Car Insurance?

There is no specific cheapest age. Car Insurance rates in India depend on your car’s engine capacity (CC), location, and type of insurance policy, not your car’s age.

 

3. How does location affect Car Insurance rates in India?

Car Insurance rates are higher in Zone A cities (metropolitan regions like Delhi and Mumbai). In general, premiums are cheaper in Zone B cities, such as Coimbatore and Indore.

 

4. How can I reduce my Car Insurance premium at any age?

Safe driving, opting for a higher voluntary deductible, installing anti-theft devices, and claiming NCB discounts are some of the best ways to lower your premium.