Every bike owner should have two-wheeler insurance, which offers legal cover against accidents, theft, and other mishaps. Knowing how the premium for two-wheeler insurance is determined can help you make better decisions concerning premiums and the costs involved.
Now, let us explore the aspects and calculations of two-wheeler insurance premiums.
Steps to Calculate Two-Wheeler Insurance Premium
Given below is the basic formula applied by the insurance premium calculators to get the insurance premium for your two-wheeler vehicle
Insurance Premium = Own Damage Premium + Third-party Premium + charges for Optional Add-on covers + Personal Accident cover + Optional Pillion Rider Additional Cover – Excess for NCB + Other Deductions
You can also use an online two-wheeler insurance calculator to show the premiums for your two insurance plans. This process may be different for separate insurance providers, yet the primary structure of calculation is nearly similar, as mentioned below:
Step 1: Go to the webpage of the insurer and look for the icon or link that reads ‘calculate your insurance premium’
Step 2: Choose your two-wheeler’s make and model
Step 3: Choose the city of registration of the two-wheeler
Step 4: Provide the year the car was purchased.
Step 5: State if the ‘no claim bonus’ was taken in the previous year
Step 6: Once you fill in the above details of your two-wheeler, the online premium calculator will display the premium you will need to pay.
Components of Two-Wheeler Insurance Premium
The premium for two-wheeler insurance is composed of several components
How to Reduce Your Two-Wheeler Insurance Premium?
Here are a few practical tips to help lower your two-wheeler insurance premium:
Factors Influencing Two-Wheeler Insurance Premiums
Some of the key factors that influence the premium of your two-wheeler insurance:
1. Insured Declared Value (IDV)
Insured Declared Value, or IDV, is your two-wheeler’s current market price. Total loss or theft of a vehicle leads to payment of the IDV, a critical determiner of the premium to be paid.
According to the formula, IDV equals manufacturing selling price minus depreciation. New bikes attract high premiums due to high IDVs compared to their counterparts with depreciation. Opting for a low IDV to bring down the premium will result in less compensation in case of a claim.
2. Engine Capacity (Cubic Capacity)
The greater the engine size, the higher and faster the bike is, resulting in more accident incidence and, hence, high premiums.
Insurers generally categorise engine capacities as follows:
The used bikes have lower market values. Hence, the premium is lower than the newer bikes with higher market values, IDV. Insurers also assume that older bikes are more likely to be involved in mechanical breakdowns, thus raising the claims ratio.
Premiums depend on the geographical region in which the bike is registered. This often implies that if an area has higher traffic density and high rates of accidents, then the premium will be high.
If you have not made any claims during the policy period, they are entitled to the No Claim Bonus (NCB), a discount on the renewal premium. This discount applies progressively, beginning at 20% and rising to 50% after the fifth year without filing a claim.
Several factors determine two-wheeler insurance premiums, including the type of insurance, engine size, geographical location, the age of the bike, and the rider.
Analysing such factors helps to make the right decision when purchasing or renewing the policy. You can reduce insurance costs by having a clean record, installing security features, selecting the right coverage, and having your two-wheeler insured reasonably.
