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  • Factors that Affect the Two Wheeler Insurance Policy

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    There was a time when all of us would have envied the person who owned a Bajaj Chetak or Suzuki Samurai for that matter even Kinetic Honda. In late 1990’s it was considered as a luxury and people preferred using cycles or public transports. But owning a two-wheeler is no more a luxury it is a need for convenience and independent freedom and to an extent, a sense of pride and way of lifestyle. It is a privilege that we are willing to pay for our own needs and a machine that will be useful for many years.

    To ensure the two wheeler is safer and protected in unfortunate incidents, one must insure the vehicle with a comprehensive policy that provides an extensive coverage for the bike and the owner. A two wheeler should minimum have a third-party policy as per the law. There are a number of factors that is responsible in determining the premium amount quote and the coverage for the insurance. The following are the factors that affects the insurance premium;

    Insured Declared Value:

    Insured Declared Value or IDV is the maximum sum assured fixed by the insurer which will be paid to the insured in the event of theft or total loss of the vehicle. In other words it is the current market value of the vehicle. So higher the IDV, higher will be the premium.

    IDV = (Manufacturer’s listing price – Depreciation) + (Accessories and extra fittings if any – depreciation)

    1.Age of the vehicle and the owner:

    The rate of depreciation for a new vehicle is comparatively less when compared to bikes which are old. Therefore the premium will also be higher for two wheelers that are old or above 3 years. A good driver is always an experienced driver. So if you are younger or has less driving experience or if you have claimed the insurance more than once in a policy year, then this will affect in the calculation of premium amount.

    Depreciation percentage based on Vehicle’s age:

    Percentage of Depreciation Age of the vehicle
    5% Between 0 to 6 months
    15% Between 6 months to 1 year
    20% Between 1 to 2 years
    30% Between 2 to 3 years
    40% Between 3 to 4 years
    50% Between 4 to 5 years

    2.Engine capacity and vehicle condition:

    Higher the cubic capacity of your engine, higher the premium. For bikes above 750cc and super bikes which are 1200cc the premium amount paid is higher. The condition of the vehicle is also important, the maintenance of the bike is taken into consideration as well.

    3.Type of cover:

    If you have only chosen a third-party cover, then the premium is lower as it is only a liability cover. But if you have chosen a comprehensive cover with add-ons like zero-depreciation, personal accident cover, cashless hospitalization, roadside assistance, pillion rider protection, etc. the premium will also be higher. Please note that the premium calculation will be done by adding the optional covers to your basic policy.

    4.Voluntary deductibles:

    It is a mandatory deductible amount that you have voluntarily agreed to pay in the insurance policy for every claim you make which is not covered in the insurance. The minimum amount that you have to pay is standard that is set by the IRDA. You can choose the percentage of amount that you are comfortable paying in the final bill amount and the remaining will be paid by the insurance company. So if you choose higher percentage of the voluntary deductible amount, the lower your premium will be.

    The standard rates of premium for the current financial year:

    As per recent IRDA norms, the premium rates has been standardised with effect from April 1st, 2017.

    Premiums Payable Engine Capacity
    Rs.569 Up to 75 cc
    Rs.720 75-150 cc
    Rs.970 150-350 cc
    Rs.1,114 350 cc and above

    The final premium amount calculation = Own damage premium + add-on covers+ third-party cover(if any) + Personal accident cover – no-claim bonus (if any)

    Before deciding on which insurance to buy, compare different insurance quotes online to get the best price for a maximum coverage. The market is flooded with insurers with whom you can negotiate and get the cover that suits and fulfills your need your comfort. Before signing the document make sure that read all the clauses carefully to avoid any disappointments later at the time of claiming the policy. Avoid claiming for minor damages as this will freeze the no-claim bonus for that policy year. For further information and clarity visit the insurer’s website or contact the company agent that you decide to buy from for more information.

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