Winning Bizness Desk

Recent pandemic had forced everyone to desist from mass transportation and many of us bought two wheelers to avoid infection. Besides, our two wheeler means two wheeler holds a special place in the life of all of us. They make our travel and life convenient, affordable and easy. For many of us, our two wheelers are the easiest means of commuting on a regular basis. It is natural that considering the importance of our vehicle, we want to ensure its safety. One of the best ways to keep our two wheeler safe is with the help of insurance. If you own a two wheeler and you have insurance for it, then at some point you must have thought about the factors that affect the premium of its insurance. So let us see what are the main factors affecting our two wheeler insurance cost.

type of two wheeler

The price of a two-wheeler varies according to the features, specifications, make and model. Since insurance covers the cost of a two-wheeler, the premium for its insurance is in direct proportion to the cost of the vehicle. So the premium for a two wheeler that costs Rs 75,000 will be less than that of a vehicle costing Rs 1 lakh. Another important factor that affects the cost of insurance premium is the cubic capacity (CC) of the vehicle which reflects the power output of the engine of that two wheeler. The premium of a 75 cc bike will be less than that of a 350 cc bike. The insurance regulator has defined slab rates based on the CC of the vehicle for computing a third party premium which is a mandatory insurance requirement. Third party premium for electric two wheelers is now defined on the basis of kilowatts (KW) instead of cc of the vehicle.

Age of two wheeler and Insured Declared Value

You must have noticed that when you fill out the proposal forum or details from the insurer's online portal, your insurer asks for the age of the vehicle. This is because the older the vehicle, the lower its value and thus the lower the premium. Like any other asset, the value of your two-wheeler also starts declining over time. The older the vehicle, the higher the rate of depreciation.

The rate of depreciation for two-wheelers is 5% for a vehicle that is less than 6 months old, and goes up to 50% for a vehicle older than 5 years.

IDV is the maximum value that your insurance company will pay for the entire loss or theft of your vehicle. The IDV is calculated each year during renewal and also adjusted for depreciation. As your vehicle gets older, its IDV also decreases. Since IDV reflects the value of the vehicle, it plays a decisive role in premium calculation.

Coverage Type

Broadly there are two types of covers available for this. A Third Party (TP) cover and a comprehensive cover. As per the law, it is mandatory to have a TP cover to drive a vehicle on the road. It protects you from third party liability that may arise in case of financial loss to a third party due to your vehicle. However, TP cover does not provide protection to your vehicle, for that you need a comprehensive policy.

A comprehensive policy protects your vehicle from natural calamities like hailstorm, earthquake, flood, flood, hurricane, landslide and rockslide. It also covers man-made disasters like riots, accidents and theft. The cost of a comprehensive policy is higher than just covering TP as it provides comprehensive protection. It is advisable to opt for a comprehensive cover to ensure complete protection of your vehicle. The cost of insurance is much less than the loss arising in case of force majeure

No Claim Bonus (NCB)

Your insurer provides you NCB for each claim-free year. NCB is the reward you get for your good driving. This exemption is given as per pre-determined slabs and starts from 20% for the first claim-free year and goes up to a maximum of 50% for five consecutive claim-free years. NCB goes a long way in reducing your motor insurance premium.

add-on cover

The add-on helps you strengthen the protection of your vehicle and allows you to adjust or customize your cover. Each add-on has some unique features and serves a specific purpose. Some of the add-ons that the insurance market offers are roadside assistance, zero deprecation, medical cover, engine protection. These add-ons come with a cover cost and they increase your premium. Hence you are advised to choose the add-on as per your requirements and adjust your cover accordingly.