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How much bike insurance is enough?

Team AckoSep 30, 2021

Bike owners often turn to insurance agents to buy or renew the plan even though digital insurance is much more convenient. But why? Most of the time because the bike owner is not aware of how much insurance will be enough. This is not the matter of being an experienced bike rider or a young one, this might happen simply because you felt that bike insurance is way too complicated. Actually, it is easy to know how much bike insurance is enough for you. Let's begin by understanding the coverages of a two-wheeler policy.

How Much Bike Insurance is Enough

What does a two-wheeler insurance policy cover?

Two-wheeler or bike insurance is mainly of two types. One is the mandatory Third-party Policy and the second is a Comprehensive Plan. Here are the coverages these plans offer.

Third-party Two-wheeler Insurance

As the name suggests, this plan covers third-party liabilities like property damage, injuries to the third party, or third-party death. The compensation for third-party property damage can go up to Rs. 7.5 lakhs. Compensation for a third party’s death/disabilities or injuries is determined by the Motor Accidents Claims Tribunal (MACT) and is calculated by factoring in the age and earning capability of the victim.

Comprehensive Two-wheeler Insurance

All the coverage offered by Third-party Two-wheeler Insurance is also covered by the Comprehensive Plan. Additionally, you can raise claims to cover the damage caused to your bike. The reasons for damage could be any of the following.

  • Natural calamities

  • Man-made calamities

  • Fire

  • Accidents

  • Theft of the bike

  • Damage beyond repair

How much does bike insurance cost?

How much premium you need to pay for buying bike insurance depends upon many factors. These are related to both the bike owner and the bike. Find the answer to how much for bike insurance in the following list of factors that affect the cost of your bike plan.

  • Age of the bike: The age of your bike is determined by its manufacturing year. Note that the bike insurance premium decreases with age. So you pay less premium for insuring an old bike as compared to a new one. 

  • IDV: IDV or Insured Declared Value is a necessary factor in determining the bike insurance premium. It is the value of the bike declared by the bike owner at the time of purchasing insurance. IDV will be the maximum amount your insurance will pay in case of a major claim. IDV will not come into the picture for the Third-party Liability component of the policy. It is applicable only for determining the Own Damage premium.

  • Engine’s cubic capacity: The engine’s cubic capacity determines the power output of the bike. The more the engine’s capacity, the more is the performance. This will also increase the insurance premium.

  • Type of bike insurance plan: It is mandatory by law to buy a long-term Third-party Liability policy for new bikes. This includes a 5-year Third-party + 1-year Own Damage plan. For old bikes, you can choose to buy either The Third-party policy or the Comprehensive Bike Insurance Plan. The cost of each plan is different and will affect the insurance premium.

  • Mandatory Personal Accident Add-on: Every bike owner must buy the mandatory Personal Accident cover along with any type of bike insurance plan selected for purchase. This add-on will increase the premium of your policy.

Two-wheeler insurance premium

Bike or two-wheeler insurance premium refers to the cost you pay to the insurance company for buying the policy. It is usually paid up front, but sometimes an insurer can offer the option of part payments. 

So far you must have known that there are two types of bike insurance policies and the factors that determine the premium. Now let’s understand who decides the exact premium for these plans.

Type of bike insurance plan Premium 
Third-party Two-wheeler Insurance The insurance regulator (IRDAI) determined the exact premium as per the bike engine’s cubic capacity. 
Comprehensive Two-wheeler Insurance The premium for Third-party components is decided by the IRDAI and the premium for Own Damage is determined by the insurance company.
5+1 year policy for a new bike This works similar to the premium for a Comprehensive Policy. The Third-party premium is fixed by IRDAI and the Own Damage premium is decided by the insurer. One major advantage of having this policy is that the Third-party (TP) premium remains fixed for 5 years. As opposed to short-term policies where TP premium is subject to change upon renewal, depending on changes in pricing by the regulator.

Important tips to reduce your bike insurance premium

Here is a list of tips that will help you reduce the premium on your bike insurance plan.

  • Opt for digital insurance: There are multiple reasons why you must consider opting for digital bike insurance. You get benefits like low premiums, less paperwork, convenient renewals, faster claims, and instant policies with online bike insurance.

  • Compare policies: Comparing bike insurance policies will give you an idea of the best plans and coverages available in the market. First, compare on the basis of coverage and services, and then compare the premium.

  • Ride the bike safely: Following traffic rules and riding the bike safely will help you get classified as a safe rider and save on the premium amount. Your risk profile is important from the insurer’s point of view. The company will price the policy based on the risk profile. And apart from avoiding accidental injuries by riding the bike safely, you will pay less for bike insurance.

  • Opt for voluntary deductibles: A deductible is an amount you pay at the time of claims. For a bike insurance claim, you need to pay a compulsory deductible of Rs. 100 and this has no effect on the insurance premium. But if you opt for a voluntary deductible, then you will get a discount on the cost of your bike insurance policy. The discount depends upon how much voluntary deductible you have decided to bear at the time of claim.

  • Renew on time: You must always renew your bike insurance policy in time to ensure continuous coverage. Another reason is, you will lose any accumulated NCB if you fail to renew the policy for more than 90 days after the expiry of your last policy, which leads to a rise in bike insurance premiums.

  • Install a certified anti-theft device: An anti-theft device will ensure that the bike is not subjected to theft. This is good in terms of insurance premium if you have a Comprehensive Two-wheeler Policy as you may not raise a theft claim. The insurance company might offer a discount on premium if you get an ARAI-certified (Automotive Research Association of India certified) anti-theft device on your bike.

Takeaway

Buying a two-wheeler insurance policy is easy if you know how it works. The most important thing is receiving enough coverage against the premium you pay. This is where the bike insurance company comes into the picture. Buying a good insurance plan from a reliable insurer will help you a lot during claims. 

Choose coverage based on your requirements. For example, buy a Comprehensive Policy if you want a financial safety net against bike damages. Go for suitable add-ons to enhance the insurance plan. And refrain from buying unwanted coverage that will only contribute to higher premiums.

Frequently asked questions

Here is a list of questions about bike insurance. We will be happy to answer any specific questions related to the topic. Send an email at [email protected] in case of queries.

What is not included in a bike insurance policy?

There are certain situations that are not included in bike insurance. These are called exclusions of the policy and you cannot raise a claim against these exclusions. Here are a few.

  • Damage from regular wear and tear of bike parts.

  • Mechanical or electrical failure.

  • Drinking and driving.

  • Any claim made when the insurance plan was inactive.

  • Other exclusions as per the terms and conditions of the policy.

Can I make a claim for damages to the engine if I have a Comprehensive plan with no add-ons?

No, the engine is not covered under a Comprehensive Policy. Consider enhancing the plan with the Engine Protect add-on to get more coverage.

I have registered my bike in Pune, Maharashtra. Can I raise a claim for damage in Kolkata?

Usually, a bike insurance policy is valid all over India. You must get in touch with the insurer and confirm the geographical limits if the damage has occurred away from your place of residence.

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