Why Have Two Wheeler Insurance Claims Climbed 15% in Recent Years?

Electric Vehicles (EVs) Adoption and High Repair Costs

One of the most significant factors is the rising share of EV two-wheelers in the market. EVs make a notable share of the two-wheeler segment in 2026. The insurance mechanics for EVs differ from those of vehicles with Internal Combustion Engines.

• Sophisticated Components: Sensors, lithium-ion batteries, and more such parts are used in an EV. Even a small accident can damage EV parts. It causes more total vehicle loss claims or high-value part replacements.
• Battery Damage: The battery pack usually accounts for 40% to 50% of the EV’s cost. With more EVs on the road, insurers are seeing a surge in claims related to battery malfunctions and battery damage, which are significantly more expensive than traditional engine repairs.

Increased Extreme Weather Events

Another factor causing the rising number of claims is extreme weather conditions, leading to:

• Urban Flooding: Major metropolitan hubs have experienced intense, short-duration rainfall leading to waterlogging. Two-wheelers are particularly at a higher risk of engine damage due to waterlogging.
• Engine Protection Add-ons: Several riders are now opting for add-ons like engine protection cover, and consumables cover. Motorcyclists are now using these repair services with the help of bike insurance policies.

The Digitalization of the Claims Process

The process of raising a claim has gone digital, making it easier for riders to avail cashless repair services. There are several insurance providers providing self-inspection and video claims.

• Lower Threshold for Claiming: Users avoided raising insurance claims for minor repairs due to excessive paperwork. The reduction in such formalities has helped policyholders to claim even for minor damages.
• AI Assessment: Artificial Intelligence (AI) algorithms are helping insurers provide a hassle-free claim settlement process. It identifies damages that a human surveyor might overlook, providing a higher payout frequency.

Rise of High-End Performance Motorcycles

Riders are now preferring high-performance motorcycles instead of regular commuter motorcycles. These motorcycles usually have a higher engine capacity between 300 cc to 650 cc.

• Expensive Spare Parts: Bike manufacturers add several premium motorcycle parts (ABS sensors, slipper clutches, TFT displays). A simple crash can lead to a higher claim amount.
• Touring Culture: Improved highway infrastructure has led to more riders going on long-distance tours. More bikes on roads increases the risk of accidents.

Rising Traffic Density and Post-Pandemic Mobility Shifts

By 2026, public transport in several cities will remain over-capacity, leading more people to rely on personal two-wheelers for daily commuting.

• Gig Economy Growth: The explosion of quick-commerce has put millions of delivery partners on the road. These riders clock significantly more kilometers than average users and operate under high-pressure environments. It leads to a higher probability of road accidents.
• Traffic Congestion: A rising number of vehicles on the roads is also resulting in traffic congestion on roads, causing frequent minor accidents.

Impact on Policyholders: What to Expect in Upcoming Years?

Here are the changes in the two-wheeler insurance segment that might impact consumers:

Hike in Premiums

To compensate for the 15% increase in payouts, Own Damage (OD) premiums for two-wheeler insurance policies are expected to see a hike of a few percentage points.

Shift Toward Usage-Based Insurance (UBI)

Users are now also choosing UBI policies, such as Pay as You Drive or Pay How You Drive bike insurance policies. Riders who maintain low mileage or demonstrate safe riding habits via telematics (usually integrated into EV dashboards) are offered discounts on the premium amount.

Bike Insurance Add-Ons That Are Becoming Essential for Riders

Since the repair values have increased, riders are increasingly opting for the following bike insurance add-ons with the base policy to increase the overall coverage:

1. Zero Depreciation Cover
   In a normal claim, insurers deduct depreciation from plastic, rubber, fibre, and metal parts before paying the claim. But with this cover, no depreciation is deducted on covered parts.
   Modern bikes (especially mid-segment and EVs) use expensive fibre panels, ABS parts, sensors, and plastic body parts. These attract high depreciation (up to 50%) in a standard policy.
   Best for: New bikes, premium bikes, EVs, and riders who want minimum out-of-pocket expense after accidents.
2. Return to Invoice (RTI) Cover
   In case of total loss or theft, the insurer pays the original invoice value of the bike instead of the depreciated Insured Declared Value (IDV).
   With higher accident severity and expensive EV components, total loss cases are increasing. Standard policies pay only the current IDV, which is much lower than what you paid.
   Best for: New bikes (especially within the first 2–3 years), EV bikes, high-value motorcycles.
3. Engine Protection Cover
   It covers engine damage caused due to water ingress, oil leakage, hydrostatic lock, which are not covered in a regular comprehensive bike insurance policy.
   Urban waterlogging and heavy rains can cause water to enter the engine if the bike stalls in flooded roads. Engine repairs are extremely expensive and otherwise fully payable by the owner.
   Best for: Riders in metro cities, coastal areas, flood-prone or heavy rainfall regions.
4. Consumables Cover
   It pays for small but necessary items replaced during repair, which insurers usually exclude in a comprehensive bike insurance policy.
   These include engine oil, brake oil, nuts & bolts, washers, screws, lubricants, grease, coolant, and filters.
   With more claims and cashless repairs, these items add up to a noticeable bill during every accident repair.
   Best for: Frequent riders, city commuters, and those who prefer complete cashless repair with minimal surprise costs.

FAQs - Why Two Wheeler Insurance Claims Have Climbed 15% in Recent Years