Two-wheeler insurance is essential for every bike or scooter owner—not just to comply with the law but also to protect yourself against financial losses due to theft, accidents, or natural disasters. One of the most common questions riders have is: “How is my bike insurance premium calculated?” This article breaks down the factors that influence the cost of your two-wheeler insurance premium and helps you understand how to get the best deal.
Types of Two-Wheeler Insurance Policies
Before diving into the premium calculation, you must understand the two main types of two-wheeler insurance:
-
Third-Party Insurance (Mandatory by Law):
-
Covers liability towards a third party in case of death, injury, or property damage.
-
Premium is fixed annually by the IRDAI (Insurance Regulatory and Development Authority of India).
-
-
Comprehensive Insurance:
-
Covers third-party liability + own-damage to your vehicle.
-
Premium varies based on multiple factors.
-
How Two-Wheeler Insurance Premium is Calculated
1. IDV (Insured Declared Value)
-
IDV = Market value of your vehicle – Depreciation
-
It is the maximum claimable amount in case of theft or total loss.
-
Higher IDV = Higher premium.
| Age of Vehicle | Depreciation on IDV |
|---|---|
| < 6 months | 5% |
| 6 months – 1 yr | 15% |
| 1 – 2 years | 20% |
| 2 – 3 years | 30% |
| 3 – 4 years | 40% |
| 4 – 5 years | 50% |
2. Cubic Capacity (CC) of the Engine
The engine capacity directly affects your third-party premium, as per IRDAI rates:
| Engine Capacity | Third-Party Premium (approximate 2025) |
|---|---|
| <75cc | ₹538 |
| 75cc – 150cc | ₹714 |
| 150cc – 350cc | ₹1,366 |
| >350cc | ₹2,804 |
3. Zone of Registration
India is divided into Zone A (metro cities) and Zone B (other cities) for insurance pricing.
-
Premiums are generally higher in Zone A due to higher risk factors.
-
Example: A bike in Mumbai (Zone A) may have a slightly higher premium than in a Tier 3 town.
4. Age and Type of Vehicle
-
Newer vehicles have a higher IDV, hence a higher premium.
-
Sports bikes or high-end models cost more to insure.
-
Older bikes (over 5 years) may have a lower IDV but could attract higher repair costs, affecting premiums.
5. Type of Coverage
-
Third-Party Only: Lower premium, legally mandatory.
-
Comprehensive: Higher premium, but offers better protection.
-
Add-ons (Optional): Zero depreciation, engine protection, roadside assistance, etc., increase the premium.
6. No Claim Bonus (NCB)
NCB is a discount offered for every claim-free year.
| Claim-Free Years | Discount on Premium |
|---|---|
| 1 year | 20% |
| 2 consecutive years | 25% |
| 3 years | 35% |
| 4 years | 45% |
| 5+ years | 50% |
Note: Even one claim resets your NCB.
7. Voluntary Deductible
-
If you agree to pay part of the claim amount, your insurer offers a discount.
-
Higher deductible = lower premium.
-
Choose this only if you can bear minor repair costs yourself.
8. Rider’s Age and Driving History
-
Riders aged 25–50 often get better rates.
-
Safe driving records can influence the own-damage premium positively.
9. Anti-Theft Devices and Safety Features
-
Installing IRDAI-approved anti-theft devices can earn you discounts (5% approx on own-damage premium).
-
It reflects a reduced risk to the insurer.
Example of Premium Calculation
Let’s consider a scenario:
-
Vehicle: Honda Activa 125cc, purchased 1 year ago
-
IDV: ₹60,000
-
Zone: Delhi (Zone A)
-
Coverage: Comprehensive
-
Add-ons: None
-
NCB: 20%
-
Voluntary deductible: ₹1,000
Estimated Breakdown:
| Component | Amount (₹) |
|---|---|
| Own Damage Premium | 2,500 |
| NCB (20%) Discount | -500 |
| Third-Party Premium | 714 |
| Add-ons | 0 |
| GST (18%) | 470 |
| Total Premium | ~₹3,200 |
Tips to Reduce Two-Wheeler Insurance Premium
-
Renew on time to keep NCB intact
-
Compare policies online for better rates
-
Install safety devices
-
Avoid small claims—let NCB grow
-
Bundle insurance if you have more than one vehicle
Frequently Asked Questions (FAQs)
Q1. What if I modify my bike?
Major modifications (like engine, exhaust, power boosters) may raise your premium or make you ineligible for claims if not disclosed.
Q2. What happens if I miss the renewal date?
You lose NCB benefits, and your policy lapses. You may have to undergo a vehicle inspection.
Q3. Is long-term insurance available?
Yes, IRDAI now mandates 5-year third-party cover for new bikes. Comprehensive plans can also be bundled for 3–5 years.
Conclusion
Understanding how your two-wheeler insurance premium is calculated helps you make smarter buying and renewal decisions. Factors like your bike’s IDV, engine size, location, and personal driving history all play a role. Use online premium calculators or consult insurers directly for the most accurate quotes and choose a plan that offers the best value—not just the lowest price.
