Renewing your bike insurance policy is a task you need to undertake every year or every 3 to 5 years depending upon the duration of your 2 wheeler insurance. Some of us, simply call our bike insurance agent and get the coverage renewed without giving it much thought. This might not be the ideal way of getting your bike insured. One should renew their bike insurance after considering their requirements and budget.
In this article, we will discuss various factors that form the premium of your bike insurance and how you can customize it as per your needs.
What Forms My Bike Insurance Premium?
Type of Insurance
You might have an idea about the type of coverages offered by your bike insurance policy. For those who don’t, bike insurance can be of two types – Third-party liability or comprehensive bike insurance policy. If you have a third-party liability policy that offers limited coverage, you can renew bike insurance by choosing a comprehensive policy. As it offers a wider coverage, it is advisable to buy comprehensive 2 wheeler insurance. Coverage offered by this type of policy:
- Third-party liabilities
- Coverage for own damage
- Theft Coverage
- Coverage against natural calamities
- Coverage against man-made calamities
IDV and Make Model
IDV is the abbreviation for Insured Declared Value. IDV forms the base of your bike insurance policy. As the price of every model of a bike is different, the cost of insurance will also differ. Price of a bike and IDV are always in proportion to each other. IDV is calculated as the approximate current market value of your bike. But IDV is not the resale value of your bike. It is the maximum amount that your insurance company will pay in case your bike is stolen or suffers full damage.
It is very important that you set the correct IDV when you renew bike insurance. Setting a higher amount will result in higher premium and setting a lower amount will reduce the claim amount in case of theft or total loss.
No Claim Bonus (NCB) is offered when the policyholder does not raise a claim. This bonus is a discount on bike insurance premium which is offered at the time of renewal. NCB is one of the highest discounts one can avail on their 2-wheeler insurance. It can be as high as 50% in case of annual policies and may rise even further for newly launched long-term policies.
One can avail 50% discount by not raising a claim for 5 consecutive policy years. NCB is the reason why driving safe leads to lower premium with each renewal for up to 5 years.
There can be two types of deductibles with your bike insurance policy. One is the compulsory deductible that you need to bear at the time of claim. Another type of deductible is a voluntary deductible that you can choose to opt for. Some policyholders opt for a higher voluntary deductible which results in a lower claim amount. However, this practice can cause a financial loss in case of an unfortunate event. Thus, it is advisable to avoid opting for a voluntary deductible and receive the maximum claim amount from your bike insurance company.
Add-ons increase the cost of a policy. Thus, it is suggested that you opt only for those add-ons that cater to your current requirement. Always review the list of add-ons being offered with your insurance policy and buy the ones that match your requirements. Add-ons such as Roadside Assistance and Zero depreciation cover are useful under all situations.
The Bottom Line
Our requirements may keep changing. You could begin working at a new location, get married and now ride with your spouse, or add accessories to your bike. These changes should reflect in your bike insurance policy at the time of renewal.