In 2019, India had the highest number of road accidents in the world, outranking China and the USA. Two-wheelers were involved in 37% of the total accidents. Shocking, isn’t it? This helps us understand why two-wheeler insurance policies are mandatory as per the Motor Vehicles Act, 1988.
Even so, some people do not take bike insurance seriously or evade the renewal process as long as they can. One main reason behind this is the premium. But, many do not know that the premium is calculated based on several factors. While some factors may not be in your control, others are. In this article, we take a look at both these types of factors and aim to increase awareness about the importance of bike insurance.
Factors within your control
1. Type of policy
The type of coverage you opt for is one of the biggest influences on your bike insurance policy premium. If you have chosen a third-party bike insurance policy, then as a consequence, the premium for that would be considerably lower than that of a comprehensive bike insurance plan. Even within comprehensive plans, the coverage offered may differ from insurer to insurer and that would affect the premium as well. So, be sure to choose your coverage as per your requirements and budget.
2. Add-ons chosen
Comprehensive policies come with the option of add-ons for those looking for additional coverage. The more the number of add-ons, the higher is the premium. However, this should not be a deterrent for you to get the required add-ons. Do not hesitate to buy an engine protection cover if you feel that your engine is vulnerable to damage.
3. Riding history of the policyholder
An individual who has a clean riding record free from traffic violations and similar breaches would benefit from this effort when they go to purchase a two-wheeler insurance policy in the form of reduced premiums. This is because a clean record shows that the rider is serious and conscious about their riding. That, in turn, implies that the rider is less likely to raise claims on their two-wheeler insurance policy as compared to someone who has a bad riding history. So, do your part in following the traffic rules and regulations.
4. Safety equipment installed in the vehicle
Another way in which you can control your bike insurance premiums to a certain extent is by installing safety equipment. For instance, an anti-theft device effectively reduces the chances of your bike getting stolen and thus, the chances of you raising a claim on your bike insurance policy.
Bike owners love to make modifications to their bikes that can better the look and overall performance of the vehicle. However, these can lead to increased premiums as it raises the number of parts of the vehicle which would require coverage. Generally, insurers ask you to choose additional coverage when it comes to newly added modifications.
6. Voluntary deductible
Deductible refers to the amount that the policyholder is expected to pay when they raise a claim and request for compensation. There are mainly two types of deductible – compulsory and voluntary. While the rates for the compulsory deductible are decided by the IRDAI, the voluntary deductible can be determined by the policyholder based on their budget, risk assessment, and so on. A higher voluntary deductible leads to a lower premium and vice versa.
7. The No Claim Bonus
For the uninitiated, the No Claim Bonus or the NCB is a concept wherein the policyholder becomes eligible for discounts on the bike insurance premium if they have not raised any claims in the past policy term. The NCB is recurring in nature and can reduce your premium by a maxim of 50%; so, make sure to practice safe driving and avoid raising claims to get a lower premium.
Factors that are not in your control
1. Age and experience
The bike insurance premium of a 30-year-old policyholder with several years of experience in riding a bike would be considerably lesser than the premium for a 19-year-old bike insurance policyholder. This is so because people are less likely to take risks as they age and are more likely to practice safe driving.
2. Geographical location
This may seem surprising to some; however, it becomes quite apparent when one realizes that some areas are more prone to accidents than others. For example, a bike rider in a city is more likely to be involved in an accident due to the presence of more vehicles than in rural areas. Or, someone who lives nearby a national highway would be more susceptible to a bike accident than someone who does not. The two-wheeler insurance premium would also see an increase if the buyer lives in an area where natural disasters are more common.
3. Cubic capacity of your bike
The Indian bike market is filled with bikes of several types with varying engine cubic capacities. Bikes that have a larger cubic capacity would incur a higher premium and those with a smaller cubic capacity would incur lower premiums.
On a general note, men are more likely to pay higher bike insurance premiums than women. This is because statistically, men get involved in accidents more than women do.
Things to keep in mind regarding your premium when buying bike insurance
1. The premium calculation method of each two-wheeler insurance provider is different. Thus, the weightage given to each factor may also differ. While some may take the age factor more seriously, others would give more leverage to your driving record.
2. Also remember that these factors intermingle with each other in the calculation of the premium. For example, a bike that has several safety mechanisms installed may still incur higher premiums on their bike insurance policy than a bike that has not, if the former has been involved in several accidents.
3. While the premium is an important aspect of any bike insurance policy, it should not be the only determinant when buying. Do make a point to look at the other features of the insurer such as claim settlement ratio, customer service, and experience in the insurance industry, and so on. A bike insurance policy that has affordable premiums would not be effective in the long run if the insurer does not have a high claim settlement ratio.
Even though you may be aware of the several factors that affect your two-wheeler insurance premium, it is important to read the policy documents and have a talk with your insurance agent before signing the policy.
In conclusion, we can say that the factors within your control are more in number than those that are not. So, make sure to do your part and reduce the overall bike insurance costs for your vehicle. Wear a helmet and ride safely.