Are Car Insurance Premiums Different in the Different States in India?


Car insurance premiums are calculated based on various factors. Is the buyer’s location one of the factors? Read this post to find out.

Whether you’re purchasing new vehicle insurance or it’s time for vehicle insurance renewal, the premium is always a vital consideration for every buyer. Insurers compute policy premiums based on factors like car model and make, type of policy, add-ons, and more.

One such factor insurers take into consideration is the buyer’s location and the RTO where the vehicle is registered. As a result, the car insurance premium for the same policy and the same car can vary between states. But why is location so critical for insurers? Let’s take a look-

Why is Car Insurance Premium Different Between States?

There are various reasons why insurers consider the policy buyer’s location while computing policy premiums. For instance, compared to rural areas, urban areas are more densely populated. Therefore, if the population of a region is high, then there will be more cars on the road, and the likelihood of road accidents will be higher.

Moreover, even cases of theft are generally higher in more populated areas. So, insurers are required to carry a higher level of risk when they insure cars in urban areas. As a result, the car insurance premium is higher for such areas compared to less-populated rural areas.

Who Decides Insurance Premiums for the Different States?

For improved transparency, the Insurance Regulatory and Development Authority of India (IRDAI) has introduced the concept of car insurance zones. Under this concept, it has divided the country into two zones- Zone A and Zone B.

Zone A includes 8 cities: New Delhi, Mumbai, Bengaluru, Kolkata, Hyderabad, Chennai, Ahmedabad, and Pune. The rest fall in Zone B. So, the premium for car insurance plans varies depending on whether the buyer is from a location in Zone A or Zone B.

What is the Difference Between Car Insurance Premiums for Zone A and Zone B?

As per IRDAI regulations, the car insurance premiums vary between Zone A and Zone B depending on the vehicle’s age and the engine’s cubic capacity. Here’s how the premium of an own damage car insurance policy is calculated for Zone A and Zone B based on these two factors-

Zone A

Car Age Less than 1000cc 1000cc to 1500cc Above 1500cc
Under 5 years 3.127% of the IDV 3.283% of the IDV 3.440% of the IDV
5-10 years 3.283% of the IDV 3.447% of the IDV 3.612% of the IDV
Above 10 years 3.362% of the IDV 3.529% of the IDV 3.698% of the IDV

Zone B

Car Age Less than 1000cc 1000cc to 1500cc Above 1500cc
Under 5 years 3.039% of the IDV 3.191% of the IDV 3.343% of the IDV
5-10 years 3.191% of the IDV 3.351% of the IDV 3.510% of the IDV
Above 10 years 3.267% of the IDV 3.430% of the IDV 3.596% of the IDV

What is IDV?

IDV is the Insured Declared Value of the car. In case the car is totalled or stolen, this is the maximum car insurance coverageyou’ll receive from the insurer. While purchasing a comprehensive plan, buyers have the option to adjust the IDV. Lower IDV can help reduce policy premiums.

Car Insurance Premium Calculation

As can be seen, car insurance policy renewal and purchase premiums can vary based on where you reside. So, if you are planning to move from a location in Zone B to one of the cities in Zone A, then you’ll have to pay higher premiums.

But apart from the premium, check the coverage, features, inclusions, and exclusions of the policy you’re about to purchase to ensure it effectively fulfils your insurance requirements and provides the expected protection.

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