Car insurance for CNG cars

Car insurance for CNG cars covers your vehicle along with the CNG kit, whether factory-fitted or retrofitted. Under the Motor Vehicles Act, 1988, third-party insurance is mandatory, while comprehensive cover provides extra protection. A CNG kit is treated as an additional mechanical/electrical component, which increases the vehicle’s Insured Declared Value (IDV). It is essential to inform your insurer about the CNG installation to ensure valid coverage. Premiums may vary based on the type of kit and risk assessment.

1. Car insurance for new CNG cars

These kits are included in the car’s overall IDV. When buying insurance, specify your vehicle is a CNG model so quotes accurately reflect coverage and premium. For car insurance for a new CNG car, factory-fitted kits follow strict quality standards and may attract different risk calculations than retrofitted kits.

2. Car insurance for old cars with CNG kit installation

After installing a CNG kit, update your Registration Certificate (RC) at the RTO as per the Motor Vehicles Act, 1988. Bring the original RC, insurance policy, CNG kit invoice, and ID proofs. Notify your insurer immediately to update the policy. Premiums generally increase by 10–20% of the kit’s value, depending on coverage and insurer assessment.

Does installing a CNG kit impact your car insurance premium?

Yes, adding a CNG kit can increase your premium due to added risks such as potential gas leaks, fire hazards if not properly maintained, and higher repair expenses. Additionally, under IRDAI’s 2025 tariff rules, a fixed premium add-on of ₹60 is applied to third-party car insurance policies for vehicles with CNG kits.

For comprehensive car insurance policies, the premium rise depends on both the CNG kit’s value and the car’s IDV, with insurers covering CNG components under mechanical and electrical parts.

How is car insurance premium calculated for CNG cars?

Calculating the insurance premium for CNG vehicles involves a step-by-step process:

• Determine the Insured Declared Value (IDV): Start with the car’s current market value and add the declared value of the CNG kit (factory-fitted or retrofit). IDV accounts for depreciation based on the car’s age.

• Apply the base premium: Use the IRDAI-prescribed rate for your vehicle category, engine capacity, and fuel type on the IDV to get the base premium.

• Apply No Claim Bonus (NCB): Subtract the NCB discount earned from previous claim-free years, if applicable.

• Adjust for Add-ons: Include optional covers like zero depreciation, engine protection, or roadside assistance by adding their costs to the base premium.

• Include Goods and Services Tax (GST): Add 18% GST on the total premium to arrive at the final payable amount.

This gives a transparent, stepwise approach showing exactly how the CNG car insurance premium is derived.

Car insurance for old cars with CNG

When insuring old cars with recently installed or factory-fitted CNG kits, the IDV decreases according to standard depreciation rates set by insurers under IRDAI guidelines. Standard depreciation rates (for example: 5% for cars under 6 months, 15% for 6–12 months, rising with age) directly affects the premium.

Adding a CNG kit on an older vehicle incurs an extra premium based on the kit’s value. Insurers may also have specific underwriting rules for retrofit CNG kits. Despite older cars having lower market value, the overall premium for car insurance for old cars with CNG can remain competitive, though slightly higher than for petrol-only counterparts.

Key car insurance premium factors for CNG cars

Insuring a CNG vehicle requires understanding the main elements that determine the premium.

• Vehicle IDV: Current market value including accessories and CNG kit.

• Engine capacity: Larger engines attract higher premiums; CNG kits usually installed in small to mid-capacity vehicles.

• Geographical zone: Urban centres have higher premiums due to increased claim risks.

• No Claim Bonus (NCB): Rewards claim-free years; claims on CNG components reduce NCB.

• Add-ons: Enhance coverage but increase the overall premium.

• Taxation: GST is fixed at 18% on premiums.

Conclusion

Insuring a CNG vehicle requires coverage that specifically includes the CNG kit. Premiums for such cars are generally higher due to the added risk and repair costs associated with the kit. It is essential that any installed CNG kit is officially registered with the RTO to ensure proper coverage. The premium is calculated based on the vehicle’s IDV, which includes the CNG kit, along with the base tariff, the car’s age, its location, and any chosen add-ons. Under the latest IRDAI guidelines, third-party insurance premiums rise by ₹60 for vehicles with CNG kits. Using online calculators can help owners estimate accurate premiums and make better decisions.

FAQs

How is car insurance premium calculated for CNG cars? 

Premiums are calculated based on your vehicle’s IDV (including CNG kit), base premium under IRDAI rules, vehicle age, location, selected add-ons, NCB, and 18% GST. The value of the CNG kit generally adds about 10-20% to the premium on that portion.

Does having a CNG kit increase car insurance cost significantly? 

Premiums rise due to extra risks such as gas leaks and higher maintenance costs. IRDAI requires an additional ₹60 on third-party policies for CNG kits. For comprehensive policies, premium increases proportionally with the CNG kit’s declared value.

Can I insure a car with a retrofitted CNG kit? 

Insurance can cover retrofitted CNG cars once the vehicle RC is updated with the RTO and the insurer is informed. Non-disclosure may lead to claim rejection or policy cancellation.

What is IDV in car insurance and how does it affect premiums? 

IDV is the Insured Declared Value, representing the car’s current market value including the CNG kit. Higher IDV leads to higher premiums, and IDV is adjusted yearly for depreciation.

How to calculate car insurance premium online for a CNG car? 

Use the insurer’s online premium calculator by entering vehicle details, including CNG kit installation, to get an accurate premium estimate.

Will CNG installation affect No Claim Bonus (NCB)? 

NCB stays intact unless a claim is made for CNG kit damage, which then reduces NCB and raises the renewal premium.

Is it mandatory to inform the insurer about CNG kit installation? 

Informing the insurer ensures coverage remains valid and avoids issues during claim settlement.

Does GST apply on premiums for CNG cars? 

GST at 18% applies on the total premium, covering both base premium and any additional charges for CNG kits.

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