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Whether you own an old car or a brand-new model, you must at least have third-party insurance to abide by the traffic rules and avoid penalties. While third-party insurance is mandatory, it would not cover any damages to your car, which makes it necessary to have comprehensive insurance that offers you dual coverage of third-party liability and own damage insurance.

Irrespective of whether your car is old or new, the third-party insurance cost remains standard for all insurers as it is fixed by the Insurance Regulatory and Development Authority (IRDAI). The insurance that varies across insurers and according to your car's make, model, or manufacturing year is the comprehensive insurance and own damage insurance. Thus, a car with the same model but a different manufacturing year will have a different insurance cost. Let's shed some light on why car insurance costs vary and whether the older cars become cheaper or more expensive to insure.

Reasons why the car insurance differs:

• Make and model:

The car's brand and model is an important factor that determines the price of the insurance. For example, insuring an old Mercedes car can be more expensive than insuring any brand-new car of a comparatively affordable brand. Also, a higher model of the car is more expensive to insure than a lower model of the same brand. The reason is that higher models have costlier parts, making repairing and replacing more expensive. In fact, even in the case of vintage cars, the insurance is more expensive as the parts are rarely found and are too expensive to replace or repair.

• Manufacturing year:

Another factor affecting the insurance price is the manufacturing year.

• Type of car insurance policy:

The insurance premium also varies depending on your insurance policy. You may add a rider to your existing comprehensive policy to get enhanced coverage at a higher premium. Depending on the geographical area, there may be riders that your car would need more than any other car of any other location. Although the third-party insurance remains the same, your comprehensive insurance varies depending upon the coverage you choose for your car. The more the number of add-ons you select higher would be your premium which would result in higher insurance costs.

• No claim bonus:

In case you have not raised any claim during the policy period, your insurance company gives you a No claim discount as a reward. This reduces your overall premium paid towards the insurance claim making your car insurance cheaper.

So, does the insurance become cheaper or more expensive?

The insurance premium for a car is calculated basis the IDV (Insured Declared Value). With the increase in the age of the car, the value of the car decreases. The main reason is the car's depreciation, which keeps increasing every year. The higher the depreciation value, the lower the IDV, making the insurance prices cheaper for old cars.

Final word:

Although the insurance decreases for old cars, this doesn't imply that you can leave your old car without any own damage insurance coverage. In case your car meets an unfortunate incident, it may result in huge financial losses in the absence of insurance. You can also drop a few riders if you buy car insurance online to keep your plan more affordable but going without insurance is not an option.

Disclaimer: The content provided is for education and informational purpose only, none of the information contained in our blog amounts to any form of opinion or advice. Please go through policy related documents carefully or consult an expert before making any insurance-related decisions.


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