How is Two-Wheeler Insurance Premium Calculated?

What is the first thing that you check while purchasing or renewing your bike insurance? It would probably be the insurance premium. But how do insurers calculate the premium? Why are two individuals required to pay different premiums even though they have purchased the same policy from the same insurer? 

While you can now easily use a two-wheeler insurance calculator to know the exact premium before purchasing insurance, how is the calculation done? What factors are considered for premium calculation? Let us have a look-

How is Third-Party Two-Wheeler Insurance Premium Calculated?

In India, two-wheeler insurance policies are of two types - third-party insurance and comprehensive insurance. Third-party insurance is a mandatory requirement for all bike owners. As a result, the IRDAI (Insurance Regulatory and Development Authority of India) regulates the premium of third-party motor insurance policies. 

The IRDAI mostly considers the cubic capacity (cc) of your bike's engine for calculating the premium. For instance, for FY 2019/20, the yearly third-party insurance premium is Rs. 482 for bikes with engine capacity less than 75cc. The premium for bikes between 75cc and 150cc is Rs. 752. The IRDAI generally increases the premium by around 10%-20% every year.  

How is Comprehensive Two-Wheeler Insurance Premium Calculated?

Most people use a bike insurance calculator for calculating the premium of comprehensive bike insurance as it is more complicated than third-party insurance. As comprehensive policy also covers own damages, several additional factors are used for calculating the premium. 

Factors Used for Calculating Comprehensive Bike Insurance Premium

Here is a list of factors used for calculating the premium of a comprehensive insurance policy-

  • Model and Make of Your Bike:

Expensive bikes mean a higher financial liability for the insurer. As a result, the premium for high-end bikes ishigher. So, if you have costly two-wheeler that costs Three lakh Rupees and above, the premium will be higher than a standard bike that costs less than Rs. 1 lakh. 

  • Manufacture Year of the Bike:

The IDV or Insured Declared Value of the bike decreases with age. So, older bikes have a lower IDV. The lower the IDV is, the lower will be the insurance premium and vice versa. So, if you are purchasing a recently launched two-wheeler, the premium will be higher than a model launched two years ago.

  • Engine Capacity of Bike:

Just like third-party insurance, a comprehensive two-wheeler insurance premium calculator also considers the engine capacity of your bike for calculating the premium. Higher engine capacity means a higher premium. 

  • Owner Details:

Factors like your age, gender, and riding experience can sometimes play a role in premium calculation. The insurance premium for an experienced rider might be lower as compared to someone who has recently started riding. 

  • Voluntary Deductible:

You also get the option to voluntarily increase the deductible at the time of purchasing or renewing your policy. A higher deductible will reduce the insurance premium but will require you to pay more for the repairs if your bike is damaged.

  • No Claim Bonus (NCB):

If you are renewing your policy and have not filed any claim in the previous year, you are entitled to receive NCB. It is 20% in the first claim-free year and increases by up to 50% in the fifth claim-free year. The NCB will also be considered for calculating the insurance premium.

  • Add-ons Opted For:

The add-ons you take can significantly impact the cost of your bike insurance. Add-ons such as medical cover, passenger cover, accessories cover, etc., can come in handy at times.

  • Safety Equipment Added:

Insurance companies take into account the safety features adopted by the owner to keep their bike safe. Installing Automotive Research Association of India (ARAI) authorised safety equipment can bring down the premium.

Apart from the points listed above, there are others like your geographic location, duration of the policy, and membership of rider association that impact bike insurance premiums.

Why Use an Online Bike Insurance Premium Calculator?

An online two-wheeler insurance calculator is a smart way to instantly know the exact premium of the insurance that you want to buy. For instance, if you are comparing multiple policies of the same insurer or different companies, the calculator will help you know the exact premium you must pay for different policies. 

Moreover, it also helps you customise the policy as per your requirement. You can easily adjust the variables like voluntary deductible, NCB, add-ons, and more to check how the changes impact the insurance premium. In other words, the premium calculator makes it easier for you to select a bike insurance policy that best suits your budget and requirements.

How to Use an Online Two-Wheeler Insurance Premium Calculator?

Using an insurance premium calculator is easy. You must enter details such as make and model of bike, IDV, voluntary deductible, NCB, etc. and you would get the exact premium instantly.   

Make sure that you cross-check all the details before submitting for accurate calculations. Compare premiums of multiple policies in a similar manner with the help of a two-wheeler vehicle insurance premium calculator to find one that offers maximum value for your money.

In a nutshell, a bike insurance premium calculator is a hassle-free way to find the best insurance quotes.

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