Home Discover Journals What Factors Are Used In Calculating Two Wheeler Insurance Premium?

What Factors Are Used In Calculating Two Wheeler Insurance Premium?

By Finserv MARKETS - Aug 28,2019
Views Icon261 Views 0 0 Comments

Two-Wheeler Insurance Premium


Indians have a fond relationship with two-wheelers, be it a scooter, a bike or a moped. Considering the traffic jams, congested roads and bumpy lanes, many of us prefer riding a two-wheeler over a car, since it saves time and money. But driving on Indian roads is an adventure in itself. This means that you are always exposed to numerous risks. Thus, it is for the sake of your own protection that you need to buy bike insurance. And by extension, also the reason why two wheeler insurance, at least third-party liability, is mandatory under the Motor Vehicles Act, 1988.

When you purchase a two wheeler insurance policy like Bike insurance, which is available on Finserv MARKETS, you are entering into an agreement to pay an annual premium to the insurer who in turn promises to cover the risk of damage or loss. But how do we decide on what this premium amount is going to be? How do we reach an exact premium for the coverage a bike or a model deserves?

Here are a few factors taken into account, worth knowing for you as a potential buyer:

  • Insured Declared Value (IDV):

IDV is the maximum sum payable by the insurance company in case you file a claim for theft or total loss of your vehicle. The IDV of your vehicle is calculated at the time of buying your cover and is calculated basis the brand, age and model of your two-wheeler. It is essentially the current market value of your two wheeler, after deducting depreciation. This determines how much sum needs to be insured, and thus the premium to be paid.

  • The Type of Insurance:

The rule of thumb is, ‘the greater the coverage, the higher the premium’.

A third-party insurance only covers damage to another vehicle, person or property, whereas, as the name suggests, a comprehensive insurance covers third-party damage as well as own damage. Since a third-part insurance is narrow in scope it attracts a lower premium for the coverage. A third-party cover is the minimum requirement as per the mandate, but if you choose to expand the coverage, be ready to shelve out extra bucks for that, which is worth every penny in premium.

  • Age of Vehicle:

The older the vehicle, the lower will be its market value. That should lower the premium, but an opposing force is at play, and it is the impact of age: it makes your vehicle more susceptible to damage, thus, increasing your premium amount. This is also the reason why the insurer examines and inspects your vehicle before the policy is granted.

  • Cubic Capacity:

The premium amount is directly proportional to the capacity of the two wheeler’s engine. Cubic capacity is the measurement of the engine capacity of your two-wheeler. The premium amount increases with the increase in Cubic Capacity.

  • Modifications:

Whenever you add accessories or modifications to your bike for improving the aesthetic or for enhancing the performance, you are treading on a trade-off. Each modification increases the policy’s cost, and more modifications, costlier the policy premium.

  • Claim History:

Your claim history impacts the premium amount. No Claim Bonus (NCB) involves discounts on premium in the next year, if you did not make any claims in the preceding year. The more claims you make, the lower the bonus gets. You can get as far as a 50% discount on bike insurance premium under NCB.

  • Add-on Covers:

Your premium increases with the amount of add-on covers that you include to your base policy. It is likely that if you have a high-end two-wheeler, you go above and beyond to protect it. Thus add-on covers like zero depreciation bike insurance cover make sense, but come with higher premium costs. Be prudent and choose to have only the necessary covers.

  • Anti-theft and security features:

For claims against theft of your two wheeler, it will be verified that you had taken all safety precautions to ensure the security of your bike. Leaving keys in the ignition would be a sin.

  • Volunteering a higher deductible will reduce the insurance premium:

The deductible is the amount you agree to pay in case of filing any claim. If you volunteer a higher deductible, it will bring down the cost of premium, but then you will be paying for the smaller claims yourself. A trade-off you should assess based on your unique situation.

  • Rider’s (Or Driver’s) age, experience and other related factors:

Some insurers factor in driver-related factors such as the riding experience of the driver and the riding history, the gender of the rider, and age.

Consider purchasing bike insurance from General Insurance, available on Finserv MARKETS. Its benefits include cash-free servicing at over 4,000 garages, hassle-free renewal and round-the-clock assistance. To get the best out of your two wheeler insurance, make sure you look at all the conditions that affect the premium price and make the best of those parameters.

Now that you know the factors that influence your premium, you should also calculate the revised premium payable at the time of policy renewal. Read about how to renew bike insurance online.

Read our top blogs to know more about bike insurance in India:

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!


Connect with Us
Connect with Us

Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522