How Does A Car’s Age Affect Its Insurance Premium?

When you buy a brand new car, you have to pay high amount of insurance premium as compared to an older car. It is a great idea to buy a financial cover in the form of insurance to ensure that you safeguard lakhs of rupees you spent on buying the car. But, what happens as the car gets older? Does insurance premium remain as high as it was in the first year? To find this answer, read on about the effects of car’s age on car insurance premium:

car insurance premium. It is cumulative in nature. Here is how NCB increases with each claim-free renewal:

Claim-free renewals Discount
One 20%
Two 25%
Three 35%
Four 45%
Five 50%
Beyond five 50%

From the very first claim-free renewal, you start getting a fixed discount on car insurance premium. If you keep driving safely and do not raise a claim, it is possible continuously get a 50% discount on each renewal beyond five years. This will decrease the cost of car insurance premium with age if no claims are raised.


Additional coverage options or Add-ons are an excellent way of enhancing your Comprehensive Car Insurance Policy. They help you buy a customized policy, which provides coverage for your specific requirements. Add-ons like Zero Depreciation and Return to Invoice are offered for brand new cars only. One can buy these Add-ons for the first couple of renewals. As the car gets older, you will not be provided with an option to buy some Add-ons. Additional coverages increase the cost of a car insurance policy. As this option is not available for an older car, the amount of premium will not be more than for basic coverage.

Car Parts

Depending on the make and model of your car, the availability of car parts might be the question if your car is damaged. Parts for older cars are difficult to obtain. Also, the value of each part reduces with time, this is called depreciation. Here is how depreciation is calculated.

Item Rate of Depreciation
  • Rubber, nylon, plastic parts
  • Tyres and tubes
  • Batteries and air bags
  • Fiberglass components
  • Paint

Depreciation reduces the overall value of the car. This also affects the cost of car insurance. Older the car, lesser is the amount of car insurance premium.


As your car gets older, its performance may degrade. Important components like brakes, clutch plates, engine, etc. age with time. Malfunctioning of components may cause accidents, which consequently result in you raising claims. Claims cause the NCB cycle to drop down to zero. This will increase the cost of car insurance. The best way to keep your car in a good condition, to reduce claims, is getting it serviced at authorized centers.


Unless the owner of an insured car has an active claim history, car insurance premium will decrease with time. Above-mentioned factors like IDV, NCB, Add-ons, etc. are the reasons because of which one pays less car insurance premium, as it gets older.

About author

I work for WideInfo and I love writing on my blog every day with huge new information to help my readers. Fashion is my hobby and eating food is my life. Social Media is my blood to connect my family and friends.
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