Is my car insurance premium related to the engine capacity of my car?


Is my car insurance premium related to the engine capacity of my car?


Yes the size and the power of your car’s engine is one of the defining factors when it comes to calculating the car insurance premium. The higher the cubic capacity or cc value of your car engine, the higher will be the premium amount. As per the Indian Motor Tariff Act, the premium calculations based on cubic capacity of your car’s engine divided into 3 slabs namely cars having a cubic capacity less than 1000cc, cars with cubic capacity between 1000-1500cc and cars with engine having a cubic capacity above 1500cc


When taking car insurance what is a better idea? Opting for a large or small deductible?


Deductible is the amount that the car owner must pay after which all expenses would be borne by the insurance company. If you are paying a higher deductible then you can lower the car insurance premium to be paid each year. A higher deductible would also mean that you would not be approaching the insurance company for every minor repair thereby increasing your chances of getting a no claim bonus.


Hi Nisha,

It is true that the engine capacity has an impact on your premium. The higher the capacity, the higher the premium. However, there are many factors that impact your Car Insurance premium too.
Model of the vehicle

The premium amount that you pay is primarily dependent on the Insured Declared Value. Remember, the more expensive your car is, the higher your insurance premium will be. The premium is also generally higher for diesel vehicles. While determining the premium amount of your Car Insurance policy, the insurance provider will also consider the year of manufacture and the vehicle’s registration date. In case your vehicle includes rare or expensive spare parts, you can expect an increase in the insurance premium.
Purpose of the vehicle

What are you going to use the vehicle for? Car Insurance is available for both personal and commercial vehicles. If you are planning to use the vehicle for commercial purposes, the insurance provider will probably charge you a higher premium for the policy. Why a higher premium for a commercial vehicle, you ask? That’s because the vehicle is a source of income.
Safety devices

Most modern cars in the market are fitted with an array of features to ensure the safety of all passengers in the vehicle. These safety features include airbags, enhanced braking systems, enhanced locking mechanisms and anti-theft devices. A few insurance providers will quote increased premiums for cars that are more prone to damage or theft.
You can bag a discount up to 2.5% on the insurance premium of your car if you have installed safety devices that are certified by the Automobile Research Association of India (ARAI).

Insurance zones

Your area of residence and the location in which your car is registered also affects the Car Insurance premium payable for your vehicle. For instance, vehicles registered in urban areas will have a higher premium, while those registered in rural areas pay relatively lower insurance premiums.

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BB Expert


Hi Sohini,

Before we answer your question, you must understand deductibles. As you might know, a deductible is a certain amount that you pay from your pocket to take care of the damages. There are two types of deductibles—voluntary and compulsory.

Compulsory deductible is that part of the damages that you’re supposed to pay from your pocket (compulsorily) before the insurance company can pay for the rest. This concept is applicable to every policyholder, irrespective of the policy they’ve opted for. But, don’t worry! This has no impact on the premium you’re supposed to pay for your policy.
The compulsory deductible amount is most likely to be fixed for your policy. For instance, if you’re supposed to pay Rs. 2,000 towards compulsory deductible, you have to pay that amount irrespective of the extent of damages. The rest, of course, would be paid by your insurer.

Voluntary deductible is the part of the damages you volunteer to pay in case of damage to your vehicle. Since you get to decide the exact amount, keeping factors like affordability and risk in mind becomes necessary. Instead of impulsively choosing the amount, you must take some time and ponder over other expenses for the month. Before taking a decision, you need to set your priorities right.

The more you pay as the voluntary deductible, the better discount rates you can avail. Although, these discounts vary according to the insurers and their policies, you’re more likely to get attractive offers on the premium.

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BB Expert