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Does High Premium Mean High Bike Insurance Coverage?

Team AckoMay 16, 2022

Bike insurance policies sell at a competitive rate in today’s market. Some plans are more expensive than others. But the big question is, do bike owners get higher insurance coverage in exchange for higher premiums? To answer this question, you can compare plans based on their coverages, services, and cost to find the best insurance policy for your bike. Let’s find out if high premiums imply higher coverage.

Does High Premium Mean High Bike Insurance Coverage?

Before we begin, here is a basic refresher on bike insurance premiums.

What is meant by bike insurance premium?

The word premium is usually used in terms of insurance policies. It is the amount you pay to the insurance company to receive coverage. In terms of bike insurance, a premium is a sum you pay for getting an insurance policy for your bike. 

Since buying bike insurance is compulsory in India, you must pay a certain amount of money to the insurer to buy the policy. This policy can mainly be one of the following types.

  1. Third-party Liability Bike Insurance

  2. Comprehensive Bike Insurance

Both policies fulfil the legal requirement of having bike insurance but offer slightly different types of coverages. While Third-party Liability Bike Insurance covers you against third-party losses, a Comprehensive Bike Insurance policy will cover damages to your bike as well. Choosing a suitable plan will ensure adequate coverage in case of bike-related mishaps.

How is bike insurance premium calculated?

The amount of bike insurance premium can differ for different bike owners, even if they own similar bike models. This is because the final amount of premium is calculated with the help of some specific factors. Here are some important ones for your reference.

  • Type of policy

Premium depends upon the type of coverage you have. A Third-party Liability Bike Insurance plan is less expensive as compared to Comprehensive Bike Insurance. Usually, lesser coverage means less premium. But coverage is not the only factor that is used to calculate the premium. 

  • Age

The bike’s age or the year of manufacturing is important to calculate the depreciation on the bike. Depreciation is the reduction in a bike's value from use or wear and tear. The value of a bike decreases with each passing year.

  • Model

The model of the bike plays a huge role in determining the ex-showroom price or the original cost of the bike. High-end models are more expensive as compared to low-end ones. Likewise, the insurance premium for high-end models will be higher than the premium for low-end models.

  • Brand

Different bike models with similar specifications come with different price tags because their brand or manufacturer is different. This has an effect on your bike insurance premium. 

  • Number of add-ons

Add-ons are extra coverages you can buy to enhance the existing plan. You can buy them only with a Comprehensive Policy and each one will increase the price of the insurance plan.

  • No Claim Bonus

This is a discount on premium for not raising bike insurance claims. Getting a No Claim Bonus means you are riding the bike safely and avoiding mishaps. In turn, the insurance company will offer a discount when you renew the plan. Thus, the No Claim Bonus is one of the factors for calculating the premium.

Your bike insurance company will consider the above factors while calculating the premium. Additionally, some insurers will also price the policy based on factors like your age, gender, marital status, location, bike usage, etc. 

Role of the premium calculator in bike insurance

The premium calculator helps you determine the approximate amount of money you must pay to buy your bike insurance policy. It is an online tool and is usually free for multiple uses. Many bike insurance companies (including ACKO) have the premium calculator in their purchase journey. 

This is how it works, you just answer a few questions and select the most suitable bike insurance plan to know its cost. If you wish to make changes, you can go back and tweak a few factors to get a better plan. 

Using the premium calculator before buying a plan will help you understand how various factors affect the cost of your policy. 

Is it possible to reduce bike insurance premiums?

You can optimise your bike insurance plan before making the final payment to get the best coverage at a lower rate. Here are some tips to help you reduce the premium.

  • Buy digital bike insurance

Thanks to online bike insurance, the entire process — from selecting a bike insurance plan to raising claims to bike insurance renewals — has become easy and transparent. Buying bike insurance online from ACKO is much cheaper as compared to buying a similar policy offline.

  • Adjust the Insured Declared Value (IDV)

IDV is the approximate current market price of your bike. Since IDV is one of the major factors that affect your bike insurance premium, you must set the value carefully. 

Just remember one thing, increasing the IDV will lead to higher premiums, but decreasing it to the lowest value can be a problem during major claims. This is because the insurer will pay the IDV amount if there is major damage to your bike. For example, total loss (damage beyond repairs) or bike theft.

  • Choose extra coverages cautiously 

While additional coverages increase the scope of your Comprehensive Bike Insurance Policy, they also increase the premium. So ensure that you choose only those covers that can be highly helpful to you. 

  • Renew the plan in time

Renewing your bike insurance policy is as important as buying it in the first place. The policy will expire someday and expose you to all the liabilities of not having bike insurance. 

You cannot claim damages or compensation when the policy is not active. Not even in the grace period. Going without insurance for a long period of time (90 days) will lead to losing all the applicable No Claim Bonus as well. 

You also need to pay traffic challans as riding your bike without an insurance policy is an offence. Overall, your out of pocket expenses will skyrocket without bike insurance.

Should you opt for deductibles?

Understanding what deductibles are is quite easy. It is usually a fixed amount you pay during claims. There are two types of deductibles  — compulsory and voluntary. The former is a fixed amount based upon the bike’s engine capacity. 

The concept of voluntary deductibles is interesting and can reduce your bike insurance premium by a good percentage. When you opt for a voluntary deductible, you are promising the insurer that you will pay a certain percentage of the claim amount and the insurer can bear the rest. Since you are willing to bear a part of the claim amount, the insurance company will offer a discount on premiums.

So should you opt for it? It depends upon how well you ride the bike. If you are a safe rider and don't raise claims frequently, you can opt for voluntary deductibles. Else don’t.

Does high premium mean high bike insurance coverage?

Now that you know how bike insurance is calculated, you can also guess that a high premium does not always mean high coverage. If you are paying more than the average price for bike insurance then you must compare plans from different insurers and choose the one that you feel is the best in terms of coverage, services, and premium. 

Choosing a Comprehensive policy is advisable as it offers multiple types of coverages. Firstly, it includes the government-mandated Third-party Liability insurance (this is coverage for third-party compensation) and also Own Damage Cover (this is related to your bike).

Frequently asked questions

We have answered a few common questions related to bike insurance and insurance premium in this section. In case of more queries, please send them to [email protected]

I have a new bike. Which type of policy should I buy?

As per traffic rules, all new bikes must have at least a 5-year Third-party policy. You can choose to buy a short-term (1 year) Own damage cover also with the mandatory plan. This will provide holistic coverage for the new bike.

Why do I have to pay a higher premium for buying a Comprehensive policy?

A Comprehensive policy is a combination of a Third-party Liability plan and Own Damage cover. You get two major coverages under this plan. Thus, you must pay a slightly higher price for buying a Comprehensive Bike Insurance Policy as compared to buying only the Third-party plan.

Do I have to pay a higher premium if I make a claim?

Making a claim will affect the No Claim Bonus. Thus, you may have to pay a higher premium while renewing the policy after raising a claim.

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