Two-wheelers are a popular and reliable mode of transportation. They are fuel-efficient and save you a significant amount of commute time when stuck in congested traffic. When you use your bike for your daily commute, the chances of mishaps and damages are high. This is where robust bike insurance comes in handy. While the compulsory third-party cover will protect you against injury or damages caused to a third party, own damage or comprehensive policy will also cover damages to your bike. But before you get an extensive motor insurance policy, here’s everything you need to know about bike insurance premiums.
Third-party liability cover
Most people believe that their insurer sets the rates for various policies. However, it is not true for all bike insurance products. When you purchase a comprehensive policy or a third party liability insurance, the premium for third-party cover is determined by the Insurance Regulatory and Development Authority of India (IRDAI). The motor insurance provider only decides the rate of own damage cover of your policy. In addition to that, third party cover is cheaper than a comprehensive policy because it does not cover the bike’s own damage.
Regardless of how well you maintain your bike, various parts will wear out over time. Depreciation is the term used to describe the regular wear and tear of vehicles, and it has a direct impact on your bike’s insurance value. The higher the depreciation, the lower your motor insurance premium and vice versa. The depreciation and your bike’s IDV are correlated.
No claim bonus
Whether you buy TVS bike insurance or insurance for any other bike, keep in mind that the no claim bonus orNCB plays a significant part in establishing the bike insurance rate. When you ride your bike in a disciplined way and make no claims in a policy year, the motor insurance provider rewards you with NCB. The NCB percentage can range from 20% to 50%, depending upon the number of claim-free years. You can use the NCB reward to lower the premium of your bike insurance’s own damage component.
When you purchase bike insurance, the insurer allows you to choose from a wide range of add-ons to boost your policy coverage. These include zero depreciation cover, roadside assistance cover, NCB protect, return to invoice cover, etc. However, you should keep in mind that you need to pay an additional amount for obtaining these add-ons.
Accessories and electronics
Bikes that are both costly and sporty come with a bunch of high-end accessories. Since the cost of these accessories is relatively high, insuring them necessitates a hefty investment. The premiums with most motor insurance companies to insure these are high.
Deductible refers to the percentage of the overall claim you must pay from your wallet. When you choose a higher voluntary deductible, your bike insurance premium is reduced significantly. However, before choosing a higher deductible, review your finances and be sure if you can bear to pay a portion of the claim amount if there is a big claim.
Insured Declared Value (IDV)
Insured Declared Value (IDV) refers to the bike’s current market worth. IDV is the maximum amount that your insurer will pay in the event of a total loss claim. So let’s say if you have a TVS two-wheeler, then a motor insurance provider will calculate the IDV for TVS insurance by deducting the depreciation from your bike’s manufacturer’s listed selling price. The more you choose your bike’s IDV, the more you will have to pay for your bike insurance and vice versa.
Location of insurance
The cost of bike insurance is also determined by the place where you live and insure your bike. Many areas are deemed to be accident-prone. For example, those who live in hilly places may have to pay more for bike insurance than those onplains.
When calculating your bike insurance premium, don’t forget to factor in all the above aspects. The above points also help draw comparisons between various motor insurance companies and their insurance products.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.