The insurance premium on a diesel, CNG and LPG car is usually up to 20% higher than that for a petrol vehicle.

Low on Fuel Cost, High on Premium

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 . 60 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 owndamage 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-à-vis petrol cars," says Amitabh Jain, head — customer service motor, ICICI Lombard. Also, some parts of nonpetrol cars are more expensive than petrol cars. This also increases the cost of car insurance. 
TRANSFER OF NO-CLAIM BONUS 
"No-claim bonus (NCB) is the reward given to the driver of the car for not making any claims. Hence, the accumulated NCB does not change if the old petrol car is exchanged for the new diesel/LPG/CNG car," says Vijay Kumar, president - motor insurance, Bajaj Allianz General Insurance. 
A) BUYING A NEW DIESEL/LPG/CNG CAR 
The NCB transfer eligibility, however, is a function of the cubic capacity (CC) of the engine of the current car and the new car. "If the CC of the new car engine exceeds a certain limit (in terms of engine CC) in comparison to the old car, the policyholder will not be eligible for the NCB transfer," Vijay Kumar says. 
For example, if an individual upgrades his car from Maruti 800 to Mercedes Benz, he/she cannot carry forward the NCB benefits. "We have seen a driving pattern of the driver and rewarded him/her with NCB in the absence of claims. This basically ascertains the driver's discipline. But we cannot assume that the driver will exhibit the same discipline in driving a much bigger car with a very high CC," says Vijay Kumar. 
Hence, if you owned a vehicle up to 1000 CC, and upgrade to a vehicle with 2000 CC, you can carry forward the NCB. But, if it is anything higher than 2000 CC, the benefits may not be transferrable, insurers say. 
B) FITTING A KIT 
If you fit an external LPG or CNG kit, you can carry forward the NCB for the new car. However, the premium charges will be hiked by at least . 60 as per existing stipulations. It can get higher based on other factors. Once you fit a kit in your car, you should intimate in writing to the insurer immediately. "After getting it endorsed in the RC of the vehicle, the insurer may conduct an inspection which may be required and the difference in premium is collected post approval," says Amitabh Jain. 
If the policyholder fails to intimate the insurance company about the change in the fuel type of the car, he/she may run the risk of claim rejection in future. "If there is any change in the risk perception of the vehicle, the change in the difference has to be communicated to the insurer and the addition in premium will be levied," says Vijay Kumar. 
Why Premium on Petrol Cars is Less 
Diesel variants are costlier than petrol variants of a car. Hence, the IDV, and consequently, the premium on diesel cars are higher 
Diesel, CNG/LPG cars are high-usage vehicles. Hence, chances of an accident involving them are high. The premium is also, therefore, higher vis-à-vis petrol cars 
Some parts of non-petrol cars are more expensive than petrol cars. This also increases cost of car insurance