Third Party Premium car insurance calculator

24 September 2018

Car Insurance Article

Driving a car can be a joyful experience, but no one can predict when something can go wrong. In case of an accident, one may get into legal and financial troubles. This is exactly what the Government of India had in mind when they mandated that all vehicle drivers, be it cars, bikes or multi-axle wheel vehicles must own a third party liability insurance policy. This can be a part of your general car insurance policy which also offers protection against several other factors related to the vehicle including damage or loss of vehicle due to natural calamities and manmade incidents and so on. One can even calculate the premium paid towards the insurance policy with the help of a car insurance premium calculator. Let’s find out how a third party insurance calculator works.

Things to know about third party liability insurance cover

Third party insurance cover for private vehicles is offered by all motor insurance providers in India as it is mandatory. As the name suggest, the principal beneficiary of this car insurance policy is neither the original policyholder, not the insurance company; it is the affected third party individual. The policy covers the financial liability of the policy holder in case of a third party individual’s permanent disability caused due to the accident, or even death.

The third party insurance cover compensation amount is calculated by the Insurance Regulatory Authority of India (IRDAI). The compensation amount is calculated keeping two important factors in mind

  • The cubic or engine capacity of the car causing the accident.
  • The earning capacity of the policy holder responsible for the accident.

Since April 2017, the policy premium rates for pertaining to third party liability cover as set by the IRDIA are as under

Engine capacity of the car Applicable Premium Amount
Up to 1000cc ₹2055
Over 1000cc but under 1500cc ₹2863
Over 1500cc ₹7890

How to calculate car insurance premium

Your car insurance premium is typically calculated based on three factors. They are as under The insured direct value of the car:  The insured direct value or IDV is simply the value of your car as estimated by your insurance provider when you apply for insurance at the first instance. The insurer estimates a value, which is essentially the maximum amount up to which you can make a claim in case of an accident or the loss or theft of your car. However, you need to remember that the value of your car depreciates with every passing year which is why the IDV also changes over time. That said, it must be noted that the IDV applies only if you have a comprehensive insurance policy and not a third party insurance policy.

The cubic capacity of the car: Cubic Capacity, abbreviated as CC, refers to the measure of the car engine’s size. Unlike the IDV, the cubic capacity of your car does not change with time. This is why cubic capacity is a key component of a third party insurance premium calculator. The cubic capacity of the car directly affects the premium amount you pay toward third party insurance cover. As per the Motor Vehicle Act of 1988, higher the cubic capacity of the car, the higher would the premium be.

The age of the car: Your car insurance premium is also determined based on the age of your car. As logic dictates, the value of the car begins to depreciate with every passing year. This simply means that an older car would incur a higher risk and therefore your car insurance premiums begin to increase as your car ages. Along with the car’s age there are a few others variable that affects the insurance premium. These include the price of the car or its IDV and the safety features present in it.
The formula for calculating car insurance premiums is as under
Premium = Own Damage Premium – (No claim bonus + discounts) + Liability Premium as Fixed by the IRDAI + Cost of Add-ons
Details required for calculating the insurance premiums for your car
You can use a third party insurance premium calculator available on all insurance provider websites and simply input the following details to calculate the premium amount

  • Name of the car manufacturer
  • Model number of your car
  • Year of manufacturing
  • Fuel type – petrol, diesel and CNG
  • Car registration date

Once you input these details you can click the ‘calculate premium’ tab to get the premium amount quote
You can then purchase the car insurance policy of your choice.

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