Buying a two-wheeler has become more of a need than a luxury these days. With a bike or any other two-wheeler, you have the convenience and accessibility of transportation at all times. If you own a two-wheeler, it goes without saying that you need to safeguard it with a two-wheeler insurance policy. According to the Motor Vehicles Act, every vehicle owner must have at least third-party insurance.
By purchasing two-wheeler insurance, you agree to pay an annual premium in exchange for coverage against the risk of damage or loss.
Do you know two people who have the same vehicle might have to pay different insurance premiums? The cost of vehicle insurance is influenced by several factors and you should be aware of the same, before investing in a plan.
In this article, we'll discuss some factors that affect the premiums for two-wheeler insurance.
Factors That Affect Bike Insurance Premium Rates
These are some of the factors based on which the premiums are calculated -
Make & Model
Among the most critical factors that affect your bike insurance premium is your bike’s make, model, and engine capacity. Vehicles with larger engine sizes are also more likely to be involved in accidents, or a sports bike will have a higher premium than a standard bike. For example, the premium of a Yamaha R15 RR will be more than that of a Hero Splendor Plus.
When it comes to determining bike insurance premiums, a vehicle's age also plays a significant role. As a bike gets older, its market value decreases. This decreasing value due to wear and tear is called depreciation. As a result, insuring an old vehicle will result in low premiums, whereas insuring a new vehicle will result in more premiums.
If your bike is registered in an area with heavy traffic, and high crime rates, or if you reside at a location that is considered accident-prone by the insurer - your insurance premiums will be higher.
Insured Declared Value (IDV)
IDV represents the estimated market value of the vehicle. It’s the maximum amount you can receive in the event that you file a claim for theft or total damage to the vehicle. The insurance premium is directly proportional to the IDV of your vehicle. Only comprehensive bike insurance policies have the IDV component and the higher your IDV, the higher the premiums.
Formula to calculate IDV:
IDV = Showroom price of the bike + Cost of accessories (if any) - Depreciation value as per IRDAI
Insurers may examine your claim history. In case you have filed any claim in the past, your policy will not qualify for a No Claim Bonus, which will result in you having to pay higher premiums.
The premium will also vary based on coverage, add-ons, etc. Adding more coverage to a base bike insurance plan will increase your premiums.
For instance, you buy a comprehensive bike insurance plan and opt for a deductible of Rs. 2000. So, you are offered a discount of Rs. 500 on your premium. In a few weeks, you meet with an accident and the damage costs come to around Rs. 10,000. So, when you file a claim, you need to pay Rs. 2000 out of your pocket along with the compulsory deductible before the insurer pays the rest.
Insurance companies let you voluntarily opt for a deductible called the ‘voluntary deductible’. A deductible is an amount you must pay before your insurance company begins to pay. So, when you opt for a voluntary deductible, you are basically taking responsibility for a part of the claim. In return, the insurer will reduce your premiums.
In general, if you opt for a higher deductible, your motor insurance premium will be lower.
Place Of Purchase
Depending on the platform or agent, premiums can differ for your bike - for the same value, coverage, and customizations. Some intermediaries or brokers can help you get better deals, while some may charge more - in order to earn more incentives.
A two-wheeler insurance policy is a must-have for all two-wheelers. It is a small price you pay to safeguard your prized possession. Make sure you keep the aforementioned factors in mind to get the right bike insurance at an affordable price.