Insuremile
IRDAI/I NTAII/BA/51/2018
CIN: U72900KA2018PTC110119

Yes, car insurance generally becomes less expensive as your vehicle ages. This decrease in premium is primarily due to depreciation, which affects the Insured Declared Value (IDV) of the car. Let’s dive into how this works and what factors influence your insurance costs.

Car Insurance for Old cars

Understanding the Basics: Depreciation and Insurance Costs

As soon as you drive a new car off the lot, it starts to lose value—a process known as depreciation. Insurance companies use the IDV to determine your premium. Since the IDV decreases with the car’s age, the cost of insuring it typically decreases too.

Why Does Car Insurance Premium Reduce with Age?


IDV Calculation Table

The IDV of a car is adjusted based on its age. Here’s a typical IDV calculation table used by insurers:

Age of the Car Percentage of Ex-Showroom Price for IDV Calculation
Under 6 months 95%
More than 6 months, less than 1 year 85%
More than 1 year, less than 2 years 80%
More than 2 years, less than 3 years 70%
More than 3 years, less than 4 years 60%
More than 4 years, less than 5 years 50%
5 years and above Determined mutually between the car owner and insurer

 

How to Maximize Savings on Older Cars


Frequently Asked Questions

1. At what age is a car most expensive to insure?

2. If car insurance for older cars costs less, why are vintage cars more expensive to insure?

3. Does making a claim increase the premium?

4. How can I save on car insurance premiums for an older vehicle?

5. How often should I review my car insurance policy?

 

As cars age, their IDV decreases, leading to reduced insurance premiums. This reduction reflects the lower market value and reduced risk associated with older vehicles. Regularly reassess your insurance coverage to ensure it matches your car’s current value and your needs. By making informed choices, you can save on premiums while keeping your vehicle adequately protected.

 

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