Thereu2019s no fixed cost for car insurance. It depends on six factors:Letu2019s understand why and how:1. The value of your caru00b7 Insured Declared Valueu00b7 Your insurance depends on your caru2019s value. Itu2019s called the Insured Declared Value or IDV. You can opt to reduce this amount.u00b7 Sum assuredu00b7 The IDV is the maximum amount the insurance company promises to pay during a claim.u00b7 IDV affects premiumu00b7 This can affect your car insurance premium amount. The higher the IDV, the higher is your premium.u00b7 Donu2019t forget depreciationu00b7 Your caru2019s parts get old. So, when it comes to replacing or repairs, the insurance company takes this into account.Market value u2023 Depreciation = Insurance payoutu00b7 You can lower your IDVu00b7 This IDV is not fixed. You can opt for an insurance with a lower IDV. This can lower your premium cost.u00b7 But remember, this means you may have to pay from your pocket if the damages exceed the IDV.2. The type of car insuranceNot every insurance offers the same coverage. It depends on the type of insurance.There are three main kinds of insurance policies available for your car. They are as follows:1) Third-PartyThis is a bare-minimum policy. It covers only the damage caused to another person and his/her vehicle. It has the lowest premium.2) ComprehensiveThis policy covers all kinds of damagesu2014to your car, another car, and the car driver.Damages include:u00b7 Collisionu00b7 Theftu00b7 Fireu00b7 Sabotageu00b7 Natural occurrencesSince this type of insurance offers greater coverage than a third-party insurance, it costs more.Your basic comprehensive car insurance premium consists of:u00b7 Cost of third-party coveru00b7 Own damage cover costu00b7 Personal Accident cover for the owner (Rs 100)u00b7 Service tax of 15%**May change over time.3) Zero DepreciationThis is an Add-on to a Comprehensive policy. It lowers the money you pay during claimed car repairs. It has the highest premium.Why you need Zero Depreciation Add-onu00b7 Your caru2019s value falls every year. This is called Depreciation. This affects you when you give the car for repair in the event of a mishap.u00b7 Your insurance company only pays a portion of the bill. This happens because the insurance company takes into consideration the depreciated value of the parts. However, a Zero-Depreciation policy avoids this. It will pay for the entire bill including the depreciation.u00b7 Usually, you can claim twice under a Zero-depreciation policy in a year.Hereu2019s the approximate cost of the premium for a car worth Rs 4 lakh with an engine capacity of 1,200 cc.Third-party Rs. 2,237Comprehensive Policy Rs. 6,000Zero-Depreciation Rs. 8,000These costs further increase when you take on Add-ons.1. Add-on coverageYou can increase the protection the insurance offers through Add-ons. The more the Add-ons, the higher would be the car insurance premium.The four common Add-ons are:u00b7 Engine protectionu00b7 NCB protectionu00b7 Invoice coveru00b7 Personal Accident cover (another driver)2. Your caru2019s ageAs discussed earlier, your Insured Declared Value depends on your caru2019s value. But, this reduces every year. So, the older your car, the lower its value. This can lower your premiumu2014and the sum assured.However, a higher age also makes the car riskier. Itu2019s more susceptible to damages. So, car companies often check your caru2019s health while deciding the premium.3. Extra security featuresOne of the easiest ways to reduce your car insurance premium is by installing anti-theft and other security features.This is because insurance companies are in the business of lowering your risk.This comes at a priceu2014the premiums you pay.The lower the risk, the lower is your insurance cost.4. Your claim historyCar insurance companies reward good drivers - those who do not claim.This is done through a u2018No-claim Bonusu2019.This bonus can be in the form of a discount on your premium. This reduces your car insurance cost.Similarly, if insurance companies see a history of multiple claims, it could drive up costs.