Imagine this - you and your friend have the same bike. Yes, absolutely the same! Down to the colour of the helmet. Yet while you complain about the high cost of a two-wheeler insurance premium, your friend looks at you with a raised eyebrow. He does not think his insurance premium is high. Well, is it possible that the same bike has different premium amounts?
There are a number of factors that affect the cost of two-wheeler insurance policies but before jumping on to the factors, let’s compare the types of two-wheeler insurance available:
Types of Two Wheeler Insurance -
1. Third-Party Liability - Third-party liability insurance is mandatory in India as per the Motor Vehicles Act, 1988. Under this policy, you can file a claim against damages or losses to a third-party or property by the insured vehicle.
Factors Affecting Third Party Insurance Premium:
Engine Capacity (in cc): Cubic capacity or CC of the engine determines the value of your vehicle. Therefore, it is the primary factor affecting third party insurance Premium. Higher the cubic capacity of the bike, higher is the cost of insurance.
You can use the following table to estimate the cost for Third Party Insurance cover of your vehicle based on its engine capacity -
|Engine Capacity (in cc)||Revised Premium Amount (from June 2019)|
|Not more than 75cc||INR 482|
|More than 75cc but not more than 150cc||INR 752|
|More than 150cc but not more than 350cc||INR 1193|
|More than 350 cc||INR 2323|
2. Comprehensive Cover - To provide overall coverage for your two-wheeler, you can opt for a comprehensive cover. Under this policy, you have complete financial protection against ‘own damage’ along with third-party damages to person or property caused by the insured vehicle.
Factors Affecting Comprehensive Cover
a. Insured Declared Value (IDV): Insured Declared Value (IDV) is the maximum compensation paid by the insurance provider in case of theft, major damage, or complete loss of the vehicle due to an accident. The IDV of your bike is calculated on the basis of the ex-showroom price. It also takes into account the year-on-year depreciation of the vehicle.
Below is a table to help you understand IDV depending on the age of your vehicle:
|Age of Two- Wheeler (in years)||IDV (in % of Ex-showroom price)|
|< 6 months||95%|
|6 months - 1 year||85%|
|1 year - 2 years||80%|
|2 years - 3 years||70%|
|3 years - 4 years||60%|
|4 years - 5 years||50%|
|More than 5 years||To be negotiated|
Numbers are indicative and subject to change
PRO-TIP: If the IDV of your two-wheeler is more, the coverage will be more and so, the premium amount is also more.
b. Age of the Vehicle: The market value of your vehicle depends on its efficiency. With an increase in age, the IDV of your vehicle drops. Therefore, older vehicles with lesser features have lower premiums too.
For example - Two-wheeler insurance for a 2015 Honda Activa will be lower than a 2017 Honda Activa.
c. Engine Capacity and Make-Model-Variant of the Vehicle: Just like in the case of Third Party, higher cubic capacity of the engine points to a higher premium amount. Moreover, the make-model-and-variant also matters while estimating the market value.
For example - Two-wheeler insurance premium for Hero Passion 110 cc will be lower than Harley-Davidson 350cc
d. Location of Registration: The price of two-wheelers changes based on location. Insurance providers have divided the country into two zones - Zone A and Zone B. Major cities and metros are a part of Zone A while smaller towns and talukas make up Zone B. The premium for the same bike with the same engine capacity will be different in the two above-mentioned zones.
For example - The on-road price for a Hero Passion Pro in Bangalore might be INR 83,500 while it may be INR 79,000 in Coimbatore. Since this changes the value of the bike, the premium amount also changes.
Additional Factors Affecting Two Wheeler Insurance Premium
No Claim Bonus: No Claim Bonus (NCB) is a percentage discount offered by your insurance company for being a safe rider. Those two-wheeler owners with no history of claims during their policy term are eligible for a 20% discount at the time of renewal.
Voluntary deductions: When you opt for Voluntary deduction, your premium amount is reduced. But, it is important to note that in the event of an accident, the amount equivalent to your voluntary deductible will be paid from your own pocket.
Installation of Anti-theft devices: Installing an Anti-Theft Device certified by Automotive Research Association of India (ARAI) can reduce the premium amount for your bike insurance by 10%.
Member of Automobile Association: Being an active member of the Automobile Association is a great opportunity to avail exclusive giveaways. Some insurers host events and provide premium services and special discounts to members to boost brand loyalty.
Add-on Cover: Common Add-on cover includes Zero Depreciation Cover, Personal Accident Cover for Pillion rider, etc. Zero Depreciation Cover ensures your claim is paid without any depreciation, apart from certain compulsory deductions. You can also opt for a Personal Accident Cover for Pillion rider if you travel with your family regularly. Add-on cover can be customized based on your needs.
Depending on the type of insurance you choose, your premium amount will vary. However, whether you are buying Third-party Liability or Comprehensive Cover, make sure you understand the coverage offered. Choose an insurance provider that offers the highest IDV since it is the main determinant of your policy premium amount. You can also compare different insurers online before buying.