New Delhi: There has been a change in the insurance premiums of cars depending on the location, model and year of manufacture.

If you have been paying a premium of Rs 7,000 or 8,000 for a car worth Rs 2.5 lakh, now you will pay only Rs 5,500 to 6,000. For a car priced at Rs 5 lakh, the premium has come down to Rs 12,000 to 13,000 from Rs 16,000 earlier.

But, even as the premium for own damage motor insurance was reduced after the tariff was removed, the Insurance Regulatory and Development Agency (IRDA) increased the third party premium.

Third party insurance covers damages caused to the car by a third person. From January, the prices of third party insurance have increased from Rs 500 to Rs 620 for a 1500cc car. For a car over 1500 cc, the premium has been increased by 300 per cent to Rs 2,500!

The following are excerpts from an interview with Karan Chopra, National Sales Manager, Bank Insurance, ICICI Lombard.

What are the things to keep in mind while buying a motor insurance policy?

You get a discount on the car premium by getting an anti-theft device fixed in your car. One should also take into account the quality of after-sales services of the company such as having a 24-hour call centre, agent and price.

To be able to get the company to react on time, find out about the number of cashless tie-ups a company has with the garages and the number of 24-hour call centres for registering claims. Also find out whether the process of paying claims is quality certified or not. Besides considering the price factor, remember that a company with higher paying ability has I AAA rating.

I suggest that you not only take the price into account but also the facilities provided by the company. You can't negotiate on the premium as the company has a fixed price for a car model depending on the location and the manufacturing year.

Is the insurance premium different for an old car?

The same formula is applied for a second-hand car as is for a new car. However, if you are buying it first-hand, you get the 'no claim bonus' as there is a 'no claim record' and you start from zero. Apart from this, all the factors remain the same. For the old car, we charge depreciation value on the insurance cover of the old car. Depreciation value is fixed and is described in the tariff rates for the next five years. If the car is more than five years old, the company and the customer together decide its depreciation value.

When you take a comprehensive cover for a new car, all parts assembled at the factory are covered in it. But if you have added anything later such as a car stereo etc, you should declare it at the time of taking the policy and get these insured as well.

What will be the impact of model and location on the car premium?

The cost of repair and spare parts are the main factors that decide the insurance premium of a model and it may vary in different locations. Service and cost of spare parts is generally higher for big cars and therefore their premiums are a little high.