Does Fuel Type Have an Impact on Your Car Insurance Premiums?

In earlier days, diesel was exclusively regarded as fuel for commercial vehicles. Be it a truck or a transport vehicle, a diesel-powered vehicle meant it was for commercial use, but now times have changed. The shortcomings of diesel fuel are overcome using technological innovations. Auto manufacturers are coming up with diesel variants along for passenger vehicles too.

A car insurance policy is mandatory irrespective of the fuel your car operates on, be it petrol, diesel, or even electric vehicle. The law makes it compulsory for all vehicles registered to have a valid copy of motor insurance policy. Using a car insurance plan, any repair costs and damages due to accidents or mishaps can be avoided. It is a financial cushion for these unexpected costs of repairs. To avoid unnecessary legal penalties and ensure protection for your vehicle and others, it is advisable to have a valid car insurance policy.

Now that you understand the importance of car insurance, let us look at the relation between the type of fuel and its insurance cost:

Cost of the vehicle

The price of the vehicle is dependent on the type of fuel required by your engine. For example, petrol-based cars are cheaper than diesel cars and even cheaper than hybrid or electric cars. Since the vehicle’s price is a direct factor that impacts the premiums, the insurance prices also fluctuate as per the fuel type of your car. A car insurance premium calculator can help you estimate the premium if you are contemplating buying diesel, petrol, or a hybrid vehicle.

Cost of repairs

The repair costs for a diesel engine are generally on the higher side as compared to petrol-powered engines. Thus, the repair charges for these types of vehicles are naturally higher. Also, diesel engines have expensive parts that increase the servicing cost of a diesel-powered car.

While the cost of your car and its repairs are some factors that determine the premium, they are not the only ones. A few more factors that impact your premium irrespective of the fuel type are as follows –

Geographic Location 

The geographic location where the vehicle is driven determines the premium too. The insurance costs in metro cities are more than non-metros due to various concerns like congestion and high traffic rate.

Type of policy

The type of policy you select impacts the premium. Since a third party car insurance policy covers liability incurred upon other affected parties, it is cheaper than a comprehensive plan that covers own damage along with third party liabilities. Further, if you select add-ons to increase the coverage, it naturally increases the premiums.

The Insured Declared Value

Insured Declared Value or IDV is the approximate market value of your vehicle. In case of total loss of your vehicle, the insurance company pays this IDV. When purchasing a  comprehensive insurance policy, you have the option to set the IDV between a particular range. The IDV has a direct relation to your premium. Lower the IDV, lower are its premiums and vice versa.

When selecting an insurance policy, remember the following points along with how it might impact based on the type of fuel. A car insurance premium calculator can aid the comparison process of the various plans. Selecting a suitable policy to ensure protection of your car becomes a hassle-free experience using this nifty tool.

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