Petrol versus Diesel: How Car Fuel Affects your Car Insurance Premium?

The car fuel plays a significant role in determining the price of the car – price is one of the major factors that buyers prefer one car type over the other. While the diesel variant was targeted at commercial users like trucks and min vans till about a few years back, today, automobile makers come out with both variants of the car except for few low-end models like Alto and Kwid because there is rising interest in diesel passenger cars. There are obvious pros and cons with each type which one needs to evaluate well before making a purchase.

However, the big question here is whether the fuel type also influences the premium of your car insurance or not? 

The answer is a definite yes. The fuel, whether your car is petrol-driven or diesel-driven is an important determinant in estimating the price of the car insurance premium. What does this mean? It means that when you and your friend buy the same car model – say, for example, Suzuki Baleno – where you buy the diesel variant and your friend gets the petrol type; not only will you pay a higher amount for the car, you will also pay a higher insurance premium. Why? Let us find out the answers in detail.

Importance of car insurance

Before we get started on the topic, it is vital to note that it is illegal to drive a car in India without valid car insurance. The consequences of doing so can be a monetary fine or even imprisonment.

Why the car insurance premium of a diesel car is higher compared to that of a petrol car?

There are different reasons for this.

1. Price

Diesel cars cost more than petrol cars. In India, cars that cost less than INR10 lakh have a price difference between the diesel and the petrol variant of up to INR 1.5 lakh in showrooms. The on-road price difference is even higher. When insurance companies price the premium, they take into consideration the price of the vehicle. Since the price is higher; the insurance premium of the diesel car is also accordingly priced high.

1. Repair Cost

The cost of repairing a diesel car is much more than a diesel car. This is an aspect that the insurance car company will consider when pricing the premium. Similarly, if your car is high-end, its premium will also be appropriately priced high.

1. Millennials now love diesel cars

The modern generation loves new-age diesel cars that automobile manufacturers are launching in recent times. This is because, with the help of advanced technology, modern diesel cars come with attractive and up-to-date features. The diesel variant is more refined and comes with enhanced cubic capacity. One area of refinement that has worked well for diesel cars is the decrease in the Noise Vibration and Harshness levels. For the outside engine clatter noise, the petrol car is still better; but, for the inside noise, diesel cars as good as petrol cars. Diesel cars have better torque figures vis-à-vis a petrol alternative; plus, the mileage is better in the diesel variant. Most of all, diesel cars emit less carbon dioxide and other greenhouse gases. This makes it a sustainable choice as more and more eco-conscious customers prefer to buy the diesel variants.

From the perspective of car insurance premiums, this sudden surge of interest in diesel cars has not gone unnoticed by insurance companies. These companies look at selling their motor insurance policies for diesel cars at higher prices to the new-age customer.

Generic factors affecting the price of an insurance premium

1. Place

This is common all across the automobile segment and is not specific to diesel or petrol cars. If you live in a metro city in India and the car is meant to be driven in this city, you will be charged a higher insurance premium. And if you are settled in a smaller city or town, your insurance premium will be lower. This is true irrespective of whether you buy petrol or a diesel car.

1. Comprehensive plan versus basic plan

If you were to buy comprehensive insurance that is valid for three years, you will need to pay up more; while if you go in for the basic insurance policy, the price will be less. Similarly, if you choose add-ons or extra facilities, your insurance premium will automatically increase.

1. Installation of certified devices to prevent theft

There are certain ARAI-certified (Automotive Research Association of India) companies that help install anti-theft devices. The aim is to safeguard your vehicle and prevent theft. When you install such devices, the insurance company will charge you a lesser premium.

1. The value of the insured declared value (IDV)

If your IDV is less, the insurance company will charge a lower premium; while if the IDV is higher, the premium will accordingly be high.

How much is the difference in the insurance premium of diesel and a petrol variant of a car model?

The difference is usually not more than 15%. It could be as little as 10% also.

 

Summary

Choosing a car is a question of your personal choice. It is not only about the model or the brand, but also about the fuel variant. Yes, there are certain points that you need to consider well before making a choice and purchasing a car. For example, the cost of diesel cars is high but the cost of fuel, in most places in India is lower than petrol. Similarly, the cost of repairing a diesel car is high, as also the insurance premium that you need to pay to the insurance company. However, diesel cars are eco-friendlier than petrol cars with less emission of carbon gases.

On the point of insurance premium, diesel cars come with higher premiums. However, if you compare and based on the model of the car, it could be a difference of a few thousand rupees only. So, if you have decided to get home a diesel car, do not simply make a decision based on the higher insurance premium. Consider all factors well.