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Bike Insurance Calculator

Arjun needed to renew the insurance of his bike. Coincidentally, on the same day, his colleague Vijay also renewed his bike insurance. They both had the same models of bikes and had even it bought in the same year from the same insurer.

When Arjun met Vijay the next day, he was surprised to know that the bike insurance price for Vijay was a bit less than his own. Why did this happen?

The answer partly lies in how insurance is calculated by a bike insurance calculator and partly in the type of insurance.  

How to Use the IIFL Bike Insurance Calculator

Insurance calculation is a critical factor when paying for bike insurance. But there’s an easy and free online solution for determining your premium cost: the IIFL bike insurance calculator.

This handy tool offers you a variety of plans to choose from. On selecting your plan, you just need to fill in the details to know your bike insurance cost.

The IIFL bike insurance calculator consists of four steps:

1.     Enter the date of purchase, RTO number, and details of your bike like make and model name.

2.     Mention information about your previous policy (keep it handy) and whether the bike is in your name or a company’s name.

3.     Fill in your details like your name, mobile number, and email ID.

4.     Tick the box to accept the terms and conditions, and then click on “Get Quote”.

The next screen provides you with the insurance two-wheeler quotes for comprehensive and third-party insurance. It also provides the premium value excluding GST and including it.        

How Bike Insurance Cost Is Calculated

The two types of two-wheeler insurance in India are third-party and comprehensive. The calculations are such that the premium amount will differ for third-party and comprehensive insurance for an identical set of circumstances.

If you use a two-wheeler insurance calculator like the one by IIFL, the final amount will vary depending on many factors and the type of insurance. 

Comprehensive insurance is always slightly higher than third-party insurance, which is probably why Arjun paid a higher premium than Vijay. However, it could also be attributed to several other factors like a no-claim bonus or additional covers and discounts.

But the question still remains: who’s really doing the math to determine your insurance premiums?

In insurance, there are dedicated specialists called actuaries whose sole job is to calculate insurance premiums based on various factors. They create formulae that, when applied, can arrive at the final cost of insurance premiums for customers.

The calculations for comprehensive or third-party insurance for two-wheeler policies are quite complex for a layperson man. Therefore, these formulae are embedded in insurance calculators that we can easily use to get a quote.

Calculation of Third-Party Two-Wheeler Insurance Premiums

Insurance Regulatory and Development Authority of India (IRDAI) considers the cubic capacity of a bike’s engine as the base for calculating third-party insurance for two-wheeler owners.

For example, in 2019-20, IRDAI fixed the insurance premium for bikes with engines between 75 CC and 150 CC at ₹752. The premium typically increases by 10% to 20% each year.

Calculation of Comprehensive Two-Wheeler Insurance Premiums

The calculation for comprehensive two-wheeler premiums is significantly more complicated because of the many factors involved. Here are a few of them:

Bike, Model and Make

The more expensive the bike, the higher is the premium. So, if you have a high-end bike, you will pay much more premium than an ordinary bike.

Year of Manufacture

The value of a vehicle decreases with age which is known as depreciation. The insured value of the vehicle is known as the Insured Declared Value (IDV). So as your bike becomes older, its value goes down, too. Thus, you will pay a lesser premium as the years go by.

Engine Capacity

The engine capacity is one of the prime considerations that actuaries make to fix the value of an insurance premium. A vehicle that has an engine of a higher cubic capacity will attract a higher premium.

Owner Details

Sometimes, gender, riding experience, and age of the owner may influence the premium calculation. For instance, a novice rider may pay a higher premium according to a bike insurance estimator than a person who has been riding a bike for several decades.

Voluntary Deductible

Here is an option that some insurance companies offer for reducing the premium value. But in the end, if there are damages to be paid for, the insurance company will pay up to the sharing limits set. 

No-Claim Bonus

Customers who did not file a claim the previous year are entitled to what is known as a no-claim bonus (NCB). It is typically between 20% to 50% of the premium amount. You can accumulate it over the years and then use it to bring down the final premium payable for the current year. 

Add-Ons

Opting for add-ons like accessories cover, passenger cover, or medical cover adds to the final premium value. You end up paying more, but you are paying for a benefit that you could use.

Conclusion

If you own a bike, you need insurance. It is not only a safety precaution for getting compensation in case of damages or vehicle theft, but it is mandatory by law. Consider using a bike insurance calculator to explore your options.

With the various aspects of bike insurance discussed above, you can now make a more informed choice when you need to renew your bike insurance.

FAQs

How are insurance premiums calculated?

IRDAI (Insurance Regulatory and Development Authority of India) fixes the third-party premiums every year against the cubic capacity of vehicle engines. Some other factors also contribute to fixing the final insurance premium payable.

What raises and lowers your bike insurance premiums?

There are many factors that can change your bike insurance premiums, like the type of insurance plan, accumulated no-claim bonus, add-ons, age of the vehicle, and bike model and make it fluctuate.

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