Insurance
•01 min read
Welcome to our brand-new series, A-Zs of Insurance. In this series, we will venture into the world of insurance to breakdown insurance jargon for you, so you’re empowered to make informed decisions about your financial security.
Buying an insurance plan means ensuring financial security in uncertain situations, like medical emergencies, unfortunate demise, car breakdown, burglary, fire, travel impediments, and more. Your insurer assures a sturdy monetary backup so you can dust off the effects of such contingencies and move ahead in life with ease.
And, in exchange for this protection, you’re required to pay a fee, known as the premium, to the insurer. The amount is determined by various factors, like your chosen coverage, pre-existing health issues, age, gender, etc.
Some insurers take into account your area of residence and determine your premium based on the zone it falls in. Let’s see what zone means.
Insurers determine motor insurance premium amounts depending on the city you reside in. Metro cities like Mumbai, Bangalore, New Delhi, Hyderabad, etc., fall under Zone 1 and the rest of India falls under Zone 2. This differentiation is usually made on the basis of local traffic conditions, likelihood of natural disasters, accident rates, incidents of theft, and more such factors.
For instance, you might notice a higher premium in Mumbai when compared to a city like Ajmer, because of factors like higher traffic, a greater probability of floods, etc.
Please go through your policy document carefully to understand if and how zones affect your premium.
Insurers have divided India into certain geographical regions, based on lifestyle and costs. These areas are known as zones and determine the premium you’ll have to pay. The concept of zones is usually seen in health insurance and motor insurance.
Insurers have divided Indian cities into various zones, based on lifestyle requirements, hospital costs, population, etc. Typically, urban metropolitan cities fall under Zone 1, whereas smaller cities fall under Zone 2 or Zone 3.
Each zone has a different premium structure. For example, if you live in Mumbai and your friend lives in Jabalpur, you’ll typically need to pay a higher premium for the same coverage. This is because healthcare costs are higher, and lifestyle diseases are more common in Mumbai (which falls under Zone 1).
