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- Apr 12, 2024
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Exchanging your old petrol car for a diesel, CNG or LPG one may be a sensible way to save some money on fuel, especially if you drive a lot. You can also consider fitting a CNG or LPG kit in your old petrol car.
However, experts would warn you that you should be prepared to shell out more for maintenance of the car. What they won't tell you is that even your car insurance premium would go up with your change of car.
According to the terms and conditions of India Motor Tariff 2002, an additional premium of Rs60 per vehicle is to be charged towards liability cover on account of CNG/LPG system.
However, the actual difference can be big, depending on the make and age of the vehicle. There is no standard differential and the actual premium varies from model to model and insurer to insurer.
"As a broad rule of thumb, typically, there is a difference of approximately 10-20% in the own-damage premium between a petrol car and one running on other fuel types, including diesel, LPG and CNG," says Arun Balakrishnan, CEO, Berkshire Insurance.
Here are a few things you should remember about car insurance if you exchange your car for a diesel one or install LPG/CNG kit in your vehicle.
Fuel type and premium
Compared with diesel, CNG and LPG cars, petrol cars are typically considered the least risky. The cost of the petrol variant of a car is typically lower than the diesel and CNG variants. That explains the lower premium.
"Typically, diesel cars have a higher premium. This is by virtue of the fact that (a) diesel variants of the cars are more expensive, hence the IDV is higher (b) diesel cars are considered 'high usage' cars by insurance companies, and, hence, they have a slightly higher risk associated with them," says Balakrishnan.
"It has been observed that usage of vehicles running on CNG/LPG is high and, hence, chances of an accident (involving them) are high when compared with vehicles that run on petrol. Therefore, to a certain extent, the risk is high in these cars vis-a-vis petrol cars," says Amitabh Jain, head - customer service motor, ICICI Lombard.
Also, some parts of non-petrol cars are more expensive than petrol cars. This also increases the cost of car insurance.
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