How Bike Insurance Premium Is Calculated in India?

For any bike owner, it is necessary to have an insurance plan of the vehicle. It is also a mandatory provision under the motor vehicle act, but people do not care much about following the same when it comes to having insurance for a bike. There are various excuses on the side of the bike owner, which include- it is not important and has got a third-party claim. Many times, due to a higher premium or the amount not being too clear, the bike owners prefer not to go for the same.

Understanding how the bike insurance premium is calculated by the insurance companies

• The type of plan: Firstly, one needs to decide what type of insurance plan he wants to go for. There are options such as third-party premium and comprehensive, among which the comprehensive plan covers everything, whether it is damage to bike, rider or even third-party. In a third-party plan, only damage to the third party is covered. The premium is calculated as per the risk to the service provider.
• Vehicle age and cubic capacity: The age of the vehicle, as well as CC, has a direct relationship with the performance of the vehicle. As vehicles get older, their performance deteriorates; and hence the premium for such vehicle is also not high. The Insured Declared Value of an old vehicle also goes down, which directly impacts the premium. It is the amount that the service provider is liable to pay in case the bike is stolen or damaged to an extent where a repair can be costlier than the value of the vehicle.
• No Claim Bonus: This is an incentive offered to every insurance plan buyer to motivate for driving safely and not having any claim in the past year. The more is the bonus, lesser is the amount one has to pay on the premium for the vehicle. Hence those who want to earn a good NCB it is good to stay away from making minor claims. However, if the vehicle is severely damaged, one must claim the same; and in such a case, the NCB may be reduced or wiped off.
• Add-ons: The service provider in the field of insurance offers various add-ons which can help one get different benefits. However, these add-ons have a direct impact on the premium to be paid. Hence, if one finds the add-ons necessary, he may go for it. Plus, one must stay away from unnecessary add-ons which can increase the amount of premium.
• Other features: There are other features such as zero depreciation and assistance in case of an emergency for which the service providers charge an additional premium. If one finds these features not much useful, he can keep away from them and get the amount of premium reduced to that extent.
• Location of registration: The Insurance Service Providers first of all assess the risk they have to bear for a specific vehicle. If the vehicle is registered in a theft-prone or accident-prone area, the premium for the same may be increased, or even the plan offer may be denied to the buyer.

Once the necessary information from the buyer about the vehicle is entered in the system, then as per the algorithm of the system the premium for a particular vehicle for a particular period is calculated. Adding to the insurance premium, there are also taxes and other amounts added which offers the final figure of the premium to be paid by the buyer for a particular plan. The figure can be changed by the buyer if he makes any change to any of the above factors that contribute to the premium calculation.