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Variables that Impact the Motorcycle Insurance Premium

The motorcycle insurance premium is computed on the basis of different factors. The auto insurance companies assess the risk exposure as per various parameters including the make and model of vehicle, usage of the vehicle, the residence of the applicant, the age of the applicant, profession of the applicant and so on.

The insurance companies in India are regulated by the IRDAI. The IRDAI ensures the protection of the policyholder’s interests. 

If you can understand the variables which can impact the insurance premium, it is possible to understand why a particular insurance plan attracts a specific premium.

Variables that Impact the Insurance Premium

The following variables impact the motorcycle insurance premium:

  • Make and Model of the Bike - The insurance premium will be low for the basic bike models. If you buy a high-end bike, you would need enhanced insurance coverage for the same. As the scope of coverage will widen, the insurance premium will be high. Insurance premium for luxury sports bike is higher than a basic bike like Bajaj Pulsar, Hero Passion Pro, and Honda CB Shine.
  • Year of Manufacture - As the age of the vehicle increases, the rate of depreciation also increases. If you buy insurance for an old vehicle, the IDV (Insured Declared Value) will be low. Hence, the insurance plan will attract a lower insurance premium.

IDV Based on the Age

  1. Age of the bike between 0 and 6 months - 95% of ex-showroom price
  2. Age of the bike between 6 months and 1 year - 85% of ex-showroom price
  3. Age of the bike between 1 and 2 years - 80% of ex-showroom price
  4. Age of the bike between 2 and 3 years - 70% of ex-showroom price
  5. Age of the bike between 3 and 4 years - 60% of ex-showroom price
  6. Age of the bike between 4 and 5 years - 50% of ex-showroom price
  • Engine Capacity - When it comes to formulating policy premium, engine capacity is one of the key parameters used by bike insurance companies. If you know the size of the engine, you can figure out the approximate insurance premium for your bike. The engine size is mentioned in cc (cubic capacity). You will have to pay the low premium if your bike is less than 75cc. On the other hand, the premium for a bike with an engine size of 350cc (and above) will be very high.
  • Geographical Location - If you are using your bike in an urban location where the traffic density is high, the insurance premium will be high. As the risk exposure increases, the premium for your vehicle insurance plan will also increase. If you are using the vehicle in rural areas, the insurance premium may be low.
  • Security Installations - The security features installed in your bike can impact the insurance premium. Since the security of your vehicle is enhanced, the risk exposure is decreased. The accessories will reduce the risk of theft, and decrease the impact damage. If the policy buyer has installed additional safety devices, they will get a discount on the insurance premium.
  • Age of the Insured - The vehicle owner’s age has an impact on the insurance premium. The insurance premium payable by a young rider is higher than the insurance premium payable by a middle-aged person. As per the insurance companies, the risk exposure of a teenager is higher than an old-aged person. An old-aged person is considered to be a responsible driver.
  • No Claim Bonus - At the time of policy renewal, if the policyholder hasn’t filed any claim in the past year, he/she is entitled to get a discount of up to 50 percent.
  • Deductible - Deductible decreases the payable insurance premium to the insurance company. Hence, you can go for a voluntary deductible to reduce the insurance premium on your bike.

Over to You

The motorcycle insurance premium is formulated based on various factors. You should choose the right amount of vehicle insurance coverage in order to reduce your out of the pocket expense. You should buy an optimum insurance plan to protect your vehicle.  While you must not be underinsured, you should not be over insured.

 The key to avail best insurance coverage is having realistic insurance expectations and opting for the plan that fulfils your insurance expectations.