How is the premium calculated on my vehicle?
December 22, 2008
Typically, insurance premium rates are determined by the type of your vehicle, its IDV, the city of registration, the period of coverage, and claims history.

The IDV is determined by the age, brand and model of your vehicle. The IDV determines the premium for your vehicle. The IDV is the sum that is paid to you in the event of theft of the vehicle or the vehicle is totally damaged and beyond repairs in an accident.



Another fact is that premium is calculated only on the cubic capacity of the vehicle. There is no consideration at all for those advanced technology and safety features in your vehicle (although some discount is available for the installation of an anti-theft device).



Another factor is claims history. If you have a bad claims history, you could be loaded with a higher premium on renewing the car insurance policy.


On the other hand, if you have been a cautious driver with a claims-free record, you are eligible for increasing discounts in your second, third, fourth years, leading up to the maximum discount of 50 per cent on premium in your fifth policy year. Of course, by the fifth year of ownership, it makes more sense to take out a third party Only policy as the reduction in the value of the vehicle and depreciation will make comprehensive cover too expensive and unnecessary.