Why Bike Insurance Renewal Get Costlier After 5 Years?

6 Reasons Why Bike Insurance Renewal Gets Costlier After a Few Years

When a bike completes 5 years, it enters a different risk category in the insurance industry. While the resale value reduces, its mechanical dependency, breakdown risk, and claim expenses rise. Insurers adjust premiums to match this increased severity of claims, which is why you notice a sharp jump in renewal costs after the fifth year.

Here are the five primary reasons for two wheeler insurance renewal getting costlier:

1. Aged Bikes Have Lower Value but Higher Repair Cost

   When a bike crosses 5 years, its Insured Declared Value (IDV) drops to almost 40–50% of the original price.
   But here's the twist:

   • Labour charges increase every year
   • Spare parts rarely get cheaper.
   • Painting and body repairs cost the same whether the bike is new or old.

   So even though your bike is worth less, repair claims can be comparatively expensive.

2. Spare Parts Become Rare & More Expensive After 5 Years

   After the 5-year lifecycle of your motorcycle, here are a few noticeable things that manufacturers follow:

3. Reduce the Production of Old Bike Parts

   When manufacturers reduce the production of old bike parts, those parts become harder to find. With less supply in the market, mechanics charge more for sourcing them. So even a minor repair can cost more than expected.

4. Stop Stocking Older Components

   If dealerships stop stocking components, workshops start fitting cheaper, non-original parts. These may not be as strong or long-lasting, which can lead to the same issue recurring and resulting in more repair claims over time.

5. Shifting Focus to Upcoming Launches

   Manufacturers prioritise their latest models for marketing, production, and dealer support. This means older bikes gradually lose attention, fewer updates, fewer skilled mechanics familiar with the model, and less effort from brands to ensure part availability. Over time, maintaining an older bike becomes less convenient and slightly more expensive, subtly encouraging customers to upgrade to newer options.

6. Higher Frequency of Claims in Ageing Vehicles

   As a bike crosses the 5-year mark, natural wear and tear increases the chances of parts failing, even with regular servicing.

   Tyres begin to lose grip, making skidding or slipping more common. Braking systems may respond more slowly, which can worsen the impact during collisions. Suspension components gradually lose their stability, resulting to a bumpier ride and an increased likelihood of damage from potholes or uneven road surfaces. Electrical components, such as batteries and wiring, also degrade over time, leading to more frequent breakdowns and increased bike insurance claims for repairs. Even the engine experiences efficiency losses, pushing up own-damage claims.

   This isn't just theory, insurers analyse real data. They observe that older bikes are involved in fewer major accidents, require more roadside assistance, and are easier targets for theft due to weakened security components. Because the overall probability of claims increases with age, two wheeler insurance companies adjust premiums accordingly to manage the higher risk.

   Hence, older bikes typically claim more, which means insurers charge higher premiums.

7. Zero Depreciation Add-On Becomes Costlier or Unavailable

   After your bike completes 5 years, the depreciation rules applied during claims become much stricter. Insurers assume that most components have significantly worn out by this time, so they deduct a large portion of the part's cost before paying out.

   For example, plastic parts attract up to 50% depreciation, rubber parts often get 0% payout, and even fibreglass components are heavily depreciated. Therefore, if these parts are damaged in an accident, you will end up paying significantly more out of pocket.

   To avoid this financial burden, many bike owners opt for zero depreciation cover with their comprehensive bike insurance policy, which ensures the insurer pays the full cost of replacing the parts. However, since wear and tear is high in older vehicles, zero depreciation cover becomes a higher risk for insurers. That's why the cost of the zero depreciation add-on cover rises sharply after 5 years. In many cases, insurers stop offering it altogether once the bike crosses a certain age.

   Therefore, if you still want complete protection without paying hefty claim deductions, the only option is to increase the premium to balance out the increased risk.

8. Third-Party Bike Insurance Premium Revision for Older Vehicles

   Third-party bike insurance premiums are not determined by insurers but are regulated by the IRDAI (the supreme regulatory body). While an older bike has a lower market value (IDV), its liability risk does not decrease because it can still cause injury or damage to others on the road.

   As bikes age, their mechanical reliability decreases, braking becomes less effective, and engine responsiveness declines. These issues can increase the chances of accidents involving third-party property or pedestrians.

   To manage this rising public-risk exposure, IRDAI studies accident frequency, road safety data, and claim statistics for each vehicle age group. When the data shows an increase in third-party claims from ageing bikes, the authority revises premiums upward for those categories.

   So even if your bike is worth less after 5 years, its legal liability risk stays high, leading to a higher mandatory third-party bike insurance premium for older vehicles.

9. Outdated Safety Features Increase Risk Profile

   New bikes today are built with far better safety technology, featuring enhancements like ABS/CBS braking, improved chassis strength, traction control, smart alerts, and overall enhanced stability. These upgrades significantly reduce the chances of serious crashes and help minimise the damage when accidents happen.

   Older bikes, however, lack most of these modern protections. Their braking and stability performance does not match current safety standards, making them more vulnerable to high-impact collisions and major repair expenses.

   From an underwriting perspective in the insurance industry, this categorises older models as high-risk. Lower safety means insurers expect more severe claims when an accident occurs, which directly leads to higher premiums for older two-wheelers.

Why Bike Insurance Companies Care More After 5 Years?

Bike insurers start paying closer attention to a bike's age after it reaches 5 years, as this is when the risk profile changes significantly. In the first three years, bikes are new, mechanical failures are rare, and two wheeler insurance premiums are relatively low, with access to most add-ons. By years 4–5, wear and tear begin to appear, parts start ageing, and minor repairs become more common, leading to a moderate premium increase.

Between 6 and 10 years, the probability of breakdowns and accident-related claims increases sharply, resulting in a noticeable rise in renewal costs. Beyond 10 years, the risk is very high, fewer insurers are willing to offer coverage, and policies come with premium loading or restricted add-ons.

In essence, as a bike ages, two wheeler insurance becomes even more essential, not less, because older vehicles carry higher financial and accident-related risks that insurers must account for.

How to Keep Premium Low After 5 Years?

Here are a few practical tips to keep your two wheeler insurance premium lower even after 5 years:

• Choose long-term bike insurance plans
• Keep a No Claim Bonus intact by not raising claims for minor repairs
• Install ARAI-certified anti-theft devices
• Prefer network cashless garages for repairs
• Avoid buying unnecessary bike insurance add-ons
• Compare two wheeler insurance online to avoid overpriced renewals

FAQs - Why Bike Insurance Renewal Get Costlier After 5 Years