When buying two wheeler insurance, you might wonder what affects your premium. Understanding these factors can help you get the best value for your money. This post explains the top 10 factors that influence your two-wheeler insurance premium, such as the age of your bike, your driving history, and the coverage you choose.
Knowing these factors allows you to make intelligent choices that lower your premium without compromising protection. Let’s discuss the key factors impacting your insurance costs and help you find the best deal.
10 Factors Affecting Two-Wheeler Insurance Premiums
1. Insured Declared Value (IDV)
The Insured Declared Value (IDV) is the maximum amount you can claim if your bike is stolen or completely damaged. It represents the bike’s current market value, adjusted annually for depreciation.
A higher IDV increases the premium, as it covers more value, while a lower IDV reduces it. The insurer typically makes the depreciation adjustment for IDV based on the vehicle’s age, so it might not be entirely in the insured’s control. Carefully set your IDV during two wheeler insurance renewal for the best premium balance.
2. Age and Condition of the Vehicle
The age and condition of your two-wheeler are also contributing factors in determining insurance premiums. Older vehicles have lower IDVs, meaning lower premium costs.
Conversely, newer or recently purchased bikes carry higher premiums due to their higher market value and repair costs. It’s also important to consider the bike’s maintenance history, as well-maintained bikes may result in lower premiums.
3. Types of Insurance Coverage
The choice between third-party liability and full coverage impacts your premium. Third-party insurance covers damages caused to other parties and is usually cost-effective.
Comprehensive insurance includes own-damage cover, theft protection, and more, resulting in a higher premium. Comprehensive insurance also covers natural disasters, fire, and vandalism, apart from own damage and theft. Opting for a comprehensive plan with add-ons may increase your premium but offers broader protection.
4. Add-On Covers
Add-ons such as zero-depreciation cover, NCB (No Claim Bonus) protection, and engine protection cover provide extra security and add to the premium.
Although they lead to increased costs, these add-ons are often worth considering, especially if your two-wheeler is a high-value model or used in adverse weather conditions.
For instance, an engine protection cover could save you significant repair expenses if you live in an area prone to floods.
5. Driving History and Claim Frequency
A driving record is an excellent indicator of insurance premiums. Frequent claims can raise your premium as they indicate increased risks to the insurer.
On the other hand, a history of claim-free years gives you the right to a No-Claim Bonus, which can significantly reduce your premium.
Driving safely and avoiding small claims can decrease costs for frequent riders aiming to maintain low premiums. Safe driving records can also result in discounts in some cases, though not all insurers may provide such incentives explicitly.
6. Vehicle’s Make and Model
Your two-wheeler’s make, model, and cubic capacity (CC) are essential in setting your insurance premium. High-performance models and bikes with larger engines tend to carry higher premiums due to the increased risk of accidents or repair costs.
Rare or luxury bikes could also increase premiums due to higher parts costs and repair complexities. Choosing a model with a standard engine capacity might help if you’re looking for cost-effective two-wheeler insurance.
7. Installation of Safety Devices
Insurance companies appreciate added safety features on your vehicle. Adding anti-theft devices approved by the Automotive Research Association of India (ARAI) can lower your premium, as they reduce the risk of theft.
Features like GPS tracking, lock systems, and alarms can demonstrate that your bike is less likely to be stolen, lowering insurance costs.The ARAI-approved safety devices might also include electronic immobilisers, for which insurers may give premium discounts.
8. Modifications to the Vehicle
If you’ve made aesthetic or performance-based modifications to your bike, you may face a higher premium. For example, engine enhancements might improve speed or performance but increase accident risk.
Similarly, cosmetic changes can raise repair costs. The impact of modifications on the premium depends on their nature. Modifications that affect the bike’s safety or performance (like engine changes) will likely raise premiums, while cosmetic changes may not always have a significant impact. Insurers often charge more for such vehicles due to these added risks, so weighing the cost of modifications against your potential insurance premium is best.
9. Rider’s Age and Location
Your age and location are also factors in calculating your two wheeler insurance premium. Younger riders or those with less experience generally have higher premiums due to perceived higher risk.
Similarly, urban areas with high traffic density increase the risk of accidents or theft, leading to a higher premium. Rural areas might offer lower premiums due to reduced accident risks.
10 .Purpose of Use
The way you use your bike affects your insurance premium. If you use your bike for personal commuting, your premium may be lower than for business or commercial purposes. Daily commuting in heavy traffic increases the likelihood of minor accidents, while infrequent use reduces the risk.
When you’re buying two-wheeler insurance, it’s essential to disclose the correct usage type to avoid issues during claims. Misrepresenting it (e.g., using a bike for commercial purposes when it’s insured for personal use) may affect claim settlement.
Conclusions
Understanding the factors affecting two wheeler insurance premiums can help you make informed choices that suit your needs and budget.
Each element, from your bike’s IDV and condition to add-on covers and modifications, plays a part in determining the premium. By managing add-ons, claim frequency, and safety features, you can refine your insurance policy to balance cost and coverage.
When aiming for affordable two wheeler insurance, always compare policy options and premium rates from multiple insurers.
Additionally, being aware of your driving habits and choosing a model that suits your insurance goals can reduce your premium over time. Selecting the right insurance policy for your two-wheeler is essential for financial security on the road, ensuring that you’re well-protected without overspending.