The premium for two-wheeler insurance is calculated based on various factors that assess the risk associated with insuring the vehicle. Here’s a breakdown of how the premium is determined:
1. Types of Coverage
- Third-Party Liability Insurance (Mandatory):
- Covers damages or injuries caused to a third party or their property.
- The premium for this is regulated by the Insurance Regulatory and Development Authority of India (IRDAI) and depends on the engine capacity of the vehicle.
- Comprehensive Insurance:
- Covers third-party liability and damages to your vehicle due to accidents, theft, natural disasters, etc.
- The premium is higher than third-party liability insurance and is influenced by several factors.
2. Key Factors Influencing Premium Calculation
- Insured Declared Value (IDV)
- Represents the current market value of the two-wheeler.
- Higher IDV leads to a higher premium but ensures better compensation in case of total loss or theft.
- Vehicle Specifications
- Engine Capacity: Larger engine capacities (measured in CC) lead to higher premiums due to increased risk.
- Make and Model: Premiums vary based on the brand, model, and type of vehicle.
- Age of the Vehicle
- Older vehicles have lower IDVs, resulting in reduced premiums for comprehensive insurance.
- However, they might attract higher premiums due to increased maintenance and risk of breakdown.
- Location
- Urban areas with high traffic density typically attract higher premiums due to a greater risk of accidents or theft.
- Rural areas may have lower premiums.
- Add-On Covers
- Optional add-ons like zero depreciation, roadside assistance, engine protection, or personal accident covers increase the premium.
- No Claim Bonus (NCB)
- A discount offered for every claim-free policy year.
- Can significantly reduce the premium over time, up to 50% in most cases.
- Rider Details
- Age, gender, driving history, and experience of the insured may affect the premium.
- Deductibles
- Compulsory Deductible: Fixed amount the policyholder must pay during a claim.
- Voluntary Deductible: Additional amount the policyholder agrees to bear in case of a claim, which reduces the premium.
- Policy Tenure
- Multi-year policies may offer discounts compared to annual renewals.
- Discounts and Offers
- Insurers may provide discounts for anti-theft devices, membership in automobile associations, or opting for digital policies.
Formula for Premium Calculation
For comprehensive policies, the premium can be roughly calculated as: \text{Premium} = \text{Own Damage Premium} + \text{Third-Party Premium} + \text{Add-On Covers} – \text{Discounts} + \text{GST (18%)}
Ways to Reduce Premium
- Choose only necessary add-ons.
- Maintain a clean driving record for NCB benefits.
- Install anti-theft devices approved by the Automotive Research Association of India (ARAI).
- Opt for voluntary deductibles.
- Compare policies online to find the best deals.
Would you like further assistance in calculating your two-wheeler insurance premium or exploring policy options?