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How Fuel Type impacts Car Insurance Premium?
Your car insurance premium, or the amount which you pay an insurance company to get insurance coverage for your car, can be affected by a lot of factors.
Some of these are the make and age of the vehicle, but what also matters is the fuel type of your car.
While there is always a debate on which fuel type is best for a vehicle, each type (petrol, CNG, diesel, etc.) can affect your car insurance premium differently.
Choosing the type of fuel will also affect your car in other ways, like its fuel-efficiency, how much money you would spend on maintaining your car, the impact on the environment, and (of course) the price of fuel itself!
But remember, whether your car runs on diesel, petrol, CNG or is an electric one, it is mandatory to purchase at least a third-party car insurance policy.
So how can the type of fuel your car uses affect your premium*? Let’s take a look:
*Keep in mind that these are generic points and may vary with the make and model of a car.
Fuel type - Petrol
Petrol is probably the most used fuel in passenger driven cars. In general, the cost of such cars and the cost of its repairs are either considered as a default or tend to be on the lower side.
What does the premium actually look like?
| Vehicle CC | Fixed third-party premium |
|---|---|
| Not exceeding 1000 cc | ₹2,072 |
| Exceeding 1000 cc but not exceeding 1500 cc | ₹3,211 |
| Exceeding 1500 cc | ₹7,890 |
Source: The Economic Times
Fuel type - Diesel
The cost of diesel-powered cars are a bit higher than most petrol-powered cars. This directly has an impact on your car insurance premium, as the higher the total cost of your car, the higher is its premium.
Generally, it is 10% to 15% higher for your diesel car in comparison to a petrol car of the same make. (So, for example if a 2016 Hyundai i-20 model has an insurance premium of Rs. 9,061 for a petrol variant, the diesel variant, will be Rs. 10,973).
Similarly, the repair costs of diesel cars are also on the higher side which can also make your car insurance premiums go up.
This can be seen a lot in high-end cars (such as the BMW M5, the Audi Q7, and Mercedes-Benz E-Class) and in cars with expensive spare parts (like car transmissions and engine alternators).
What does the premium actually look like?
| Vehicle CC | Approximate third-party premium |
|---|---|
| Not exceeding 1000 cc | ₹2,093 |
| Exceeding 1000 cc but not exceeding 1500 cc | ₹3,243 |
| Exceeding 1500 cc | ₹7,968 |
Source: The Economic Times
Fuel type - CNG
CNG as a fuel type for cars is gaining popularity as it is both easy on your pocket in the long run and environment friendly too.
In CNG cars, the premium amount is generally increased by Rs. 60, and some additional taxes are added to third-party only policies.
When it comes to a comprehensive policy, it depends whether your CNG kit came with the car or was fitted in later.
Externally installed CNG kit - It is possible to convert your petrol car into a CNG car, but remember to inform your insurer so that your policy can be upgraded. CNG vehicles need higher maintenance along with a high installation cost (a good quality CNG kit can cost around Rs 50,000). So, your own-damage premium will likely increase by 4-5% of the kit value.
Internally fitted CNG kit - Insuring a new pre-fitted CNG vehicle is basically the same as insuring any other type of vehicle (as here the CNG kit comes with the vehicle). Just ensure you mention the fuel type and know that the premium you will get will likely be the highest as compared to the insurance premium of the same car running on either petrol or diesel.
Fuel type - Electric
Like CNG vehicles, electric cars are also becoming more popular as they are cost-effective and better for the environment. Keeping this in mind, your insurance premium is generally lower.
Especially for third-party policies, electric vehicle premiums are cheaper than those for regular vehicles, premium rates are actually 15 per cent cheaper than that of regular fuel-based vehicles.
What does the premium actually look like?
| Vehicle kilowatt capacity (KW) | Premium rate for one-year third-party policy |
|---|---|
| Not exceeding 30 KW | ₹1,761 |
| Exceeding 30KW but not exceeding 65KW | ₹2,738 |
| Exceeding 65KW | ₹6,707 |
Source: The Economic Times
Third-Party Car Insurance Premium Comparison for different Fuel Variants
For Hyundai Elite i20, Asta (1396 CC)
| Petrol Variant | Diesel Variant | CNG Variant* |
| ₹3,221 | ₹3,244 | ₹3,281 |
Disclaimer - The premium calculation is done for Hyundai Elite i20, Asta (1396 CC) purchased in 2019, from Bangalore with IDV between 4,71,000 - 5,69,200. The premium calculation is done in October 2020.
*CNG kit fitted to a Petrol car after purchase, costing ₹35,000
Comprehensive Car Insurance Premium Comparison for different Fuel Variants
For Hyundai Elite i20, Asta (1396 CC)
| Petrol Variant | Diesel Variant | CNG Variant* |
| ₹8,500 | ₹9,484 | ₹9,680 |
Disclaimer - The premium calculation is done for Hyundai Elite i20, Asta (1396 CC) purchased in 2019, from Bangalore with IDV between 4,71,000 - 5,69,200. Comprehensive insurance includes NCB - 20%, and no Add-ons. The premium calculation is done in October 2020.
*CNG kit fitted to a Petrol car after purchase, costing ₹35,000
So, what does all this mean for you?
Essentially, your car insurance premium is affected by what type of fuel you use to run your car as follows:
- Electric: Electric vehicle premiums are much cheaper than those for regular vehicles, at least 15 percent cheaper than regular fuel-based vehicles.
- Petrol: Petrol vehicles are considered a sort-pf default rate and have fairly low premiums.
- Deisel: Car insurance premiums for diesel cars are slightly higher than that of petrol.
- CNG: usually, the premium you will get for CNG cars will be the highest as compared to the that of the same car running on either petrol or diesel.
There will always be debate on which fuel type is the best for your vehicle, so be sure it fulfils all your personal needs (such as CNG being environmentally friendly, or electric cars having the lowest premiums) before you make a choice.