How Car Make and Model Affect Insurance Premiums?

Insurance companies calculate premiums based on risk. If your car is seen as high-risk—either due to being costly to repair, easily stolen, or used for high-speed driving—then you’ll likely pay more for insurance.

1. Car Segment and Value

Luxury cars, SUVs, and high-end sedans usually have higher premiums because:

• They cost more to repair.

• Their parts are expensive and harder to replace.

• They’re often targets for theft.

On the other hand, hatchbacks or basic sedan models usually attract lower premiums. Their spare parts are readily available, and repairs are more affordable.

Example: A basic Maruti Alto may have a lower premium than a top-end Honda City or Toyota Fortuner.

2. Engine Capacity (CC) and Performance

Engine capacity directly impacts your third party car insurance premium. The IRDAI (Insurance Regulatory and Development Authority of India) has established a slab-based pricing system based on cubic capacity.

• Cars with engine capacity under 1000cc have lower premiums.

• Cars with 1000cc–1500cc fall into a mid-range.

• Cars with over 1500cc attract the highest third-party insurance cost.

So, a more powerful car = more risk = higher premium.

3. Fuel Type

The fuel variant of your car—petrol, diesel, or electric—also affects the premium.

• Diesel cars generally have slightly higher insurance premiums than petrol due to their higher repair cost.

• Electric vehicles (EVs) may receive special discounts as the government promotes green mobility.

4. Car’s Age and Depreciation

As a car gets older, its IDV (Insured Declared Value) goes down due to depreciation. This reduces the comprehensive car insurance premium.

However, very old vehicles may face higher third party insurance costs as they become riskier to maintain and more likely to cause accidents.

5. Car Brand and Spare Part Availability

Popular car brands with easily available spare parts generally attract lower premiums. Rare or imported models with hard-to-find parts cost more to insure because they’re expensive to fix.

6. Car Safety Features

Cars with strong safety features such as airbags, ABS (Anti-lock Braking System), reverse parking sensors, and high safety ratings can get discounts on comprehensive car insurance.

Why? Because they reduce the chances of severe damage or injuries in case of accidents—lowering the insurer’s risk.

7. Usage and Location

While not directly related to the model, the purpose for which a car is used and the city it is registered in can increase or reduce the premium:

• Cars used for daily commute in busy cities like Delhi or Mumbai might be charged higher than those used occasionally in small towns.

• The risk of accidents, theft, and parking damage is higher in metros.

Choosing a car model that minimises your premium involves selecting vehicles with strong safety ratings, lower engine capacities, and a history of fewer claims. Hatchbacks and mid-size sedans often attract lower premiums than luxury or sports cars due to repair and theft risk. Avoid models with costly spare parts or high theft rates. Additionally, opting for car models that are popular and widely available in your region often means parts are easier to find and repairs are affordable, further lowering insurance costs. Installing approved anti-theft devices or selecting cars with built-in security features can also reduce premiums. Always obtain insurance quotes before purchase to understand how model choice, regional factors, and available add-ons impact your overall premium.

Choosing a car model that minimises your premium involves considering several factors that influence your car insurance costs:

• Safety Ratings: Cars with high safety ratings often attract lower premiums, as they are less likely to be involved in expensive accidents.

• Engine Size: Smaller engine sizes usually result in lower premiums since they are considered less powerful and less risky.

• Claim History: Cars that have a history of fewer claims generally attract lower premiums.

• Repair Costs: Avoid cars with high repair costs. Opting for models with affordable parts and common availability helps lower insurance premiums.

• Theft Risk: Cars with higher theft rates will often cost more to insure. Choosing a model with built-in security features or an approved anti-theft system can help lower premiums.

• Car Model Popularity: Popular cars with readily available spare parts typically cost less to insure, which makes them ideal for reducing your rodent cover in car insurance costs, if applicable.

By understanding how car model affects insurance premiums, you can make a more informed decision to reduce your costs.

In India, the car insurance premium is made up of two components: Third-Party Liability (regulated by the IRDAI) and Own Damage cover (provided by insurers). The Third-Party Liability premium is fixed by the IRDAI, and it is determined based on the engine capacity of the vehicle. Here's a breakdown of the Third-Party Premium rates as of April 1, 2022:

These rates are fixed across all insurance providers and are the same regardless of the make or model of the vehicle. However, when it comes to Own Damage cover, the premium can vary based on factors like the car make and model, repair costs, safety features, and the car's likelihood of being stolen.

For instance, luxury or sports cars generally attract higher premiums for Own Damage cover due to expensive parts and high repair costs. On the other hand, economy carswith lower repair costs and a lower theft risk will likely have a more affordable premium. Understanding the insurance pricing structure based on engine capacity and car model will help you choose a vehicle that fits your budget while ensuring adequate coverage.

Read Also: Car Insurance Premium Calculator

Understanding how a car model affects insurance can help you make informed buying decisions. Premiums vary based on factors like vehicle type, safety features, repair costs, and associated risks. By selecting a car with low-risk attributes, you can minimise your premium without compromising on quality. Always compare insurance quotes while choosing your vehicle to ensure it fits your budget in the long run.

1) Does Car Model Affect Insurance?

Yes, your car’s make and model can directly affect your premium based on factors like risk level, cost of repairs, and safety features.

2) Do electric cars cost less to insure?

Not always. While they have fewer moving parts, high repair and battery replacement costs can make insurance more expensive.

3) Are performance models always costlier to insure?

Generally, yes. Sports or high-performance models are seen as riskier and thus attract higher premiums.

4) Do safety features reduce premiums?

Yes, cars with modern safety features like ABS, airbags, and parking sensors may qualify for lower premiums.

5) How are CBU premiums compared to local models?

Completely Built Units (CBUs) often attract higher premiums due to costlier repairs, limited part availability, and higher risk perception.