Steps to calculate Two Wheeler Insurance Premium.
If you own a two wheeler, it becomes your prime mode of transport. As per Indian law, every vehicle must be insured. Two wheeler insurance covers the damages that are occurred in an accident. Moreover insurance protects you against third party liability and helps you to cope with the monetary loss. Insurance not only shield you from fatal circumstances but also offers support to your commuters and pedestrians.
What is a premium?
Two wheeler insurance is a contract where the insurer assumes the risk of the damage caused to the vehicle during an accident. To avail this facility from the insurer, the insured in return pays a specific sum to the company annually in installments. These premiums vary in accordance with the coverages provided. The more coverage you gain the higher will be the premium. Your policy stays active unless the payment of premium is unpaid.
Factors that affect your premium
Have you ever wondered how your premium is calculated and what factors affect the premiums? As mentioned above, the amount of premium depends on the coverages offered as well as the age and health of the owner and the type of two-wheeler that is owned.
Every customer who signed up for insurance undergoes through the underwriting process, which involves the investigation of hereditary diseases of the insured, analysis of the two-wheeler owned along with the medical reports. This collective data is typically analyzed by actuaries hired by insurance companies, who are statisticians by profession.
Later the scrutiny, the actuary predicts the probability of the claim duration which determines the amount of premium. To put it in other way, the higher the probability of claim the more the premiums you need to pay. On the other hand the same actuaries are responsible for researching the mortality and sickness possibility rates of the insured.
In addition to the above factors, Insured Declared Value or IDV on the two-wheeler, Discounts, bonus offered along with the previous plans also affect the value of premium. IDV is determined by the current market value of the vehicle where the value is laid down by IRDA.
In brief, the total premium value for your insurance plan is an amount charged on the insured, considering the information generated during the underwriting process along with the Vehicles age. On a final note, premiums determine your extent of coverage which in turn covers the damages caused. Choose your plan that suits your vehicle. Owning a standard two-wheeler regulates your premium to a nominal amount as the coverages required is limited. On the other hand, a sports vehicle needs higher coverage for its protection which in that event increases the premium amount.