Two-Wheeler Insurance Premiums Set for Significant Surge

Get ready, two-wheeler owners: insurance premiums are set for a major jump, impacting millions of riders nationwide very soon. This coming change means a bigger financial burden for everyone with a motorcycle or scooter, as new rules and market forces drive costs higher. The increase shows a shift in how insurance companies figure out risks and pay claims, making it vital for riders to know what is happening and how it will affect their money. This upcoming rise in insurance costs makes owning and riding a two-wheeler more expensive than before.

Riding Costs on the Rise: What Riders Need to Know

Get ready, riders! The cost of owning a two-wheeler in India is set to see some changes, particularly when it comes to bike insurance. Reports from various sources indicate that the premiums for bike insurance might increase. This adjustment is largely driven by a combination of factors, including the financial health of insurance companies and the rising costs associated with claims.

This news impacts millions of daily commuters and enthusiasts who rely on their bikes for transport and adventure. Staying informed is key to navigating these upcoming changes and ensuring your ride remains protected on the roads.

Understanding the Reasons Behind the Change

So, why are these changes happening now? The main reason stems from the financial pressure that insurance companies have been feeling. For the past four years, premiums for third-party insurance have stayed mostly the same, with only small adjustments made in 2022 and 2023.

During this time, the costs for medical treatments, legal payments for accident victims, and vehicle repairs have gone up a lot. This has caused insurance companies to pay out more in claims than they collect in premiums.

"In simple terms, insurers are now spending nearly as much, or more, on claims than they collect in premiums. This squeeze has put immense pressure on the financial health of general insurers, making a premium hike not just likely but necessary."

This situation has led to high 'loss ratios' for insurers, meaning they are paying out a significant portion of their earnings in claims. For example, some government and private insurers have reported high loss ratios on third-party insurance, highlighting the need for premium adjustments to keep them financially stable.

The Insurance Regulatory and Development Authority of India (IRDAI), which sets the rates for third-party bike insurance, looks at these loss ratios and the total number of claims when deciding on premium adjustments.

What is Third-Party Insurance?

Third-party motor insurance is a must-have for all vehicles in India, as per the Motor Vehicles Act. This type of bike insurance covers damages or injuries you might cause to another person or their property in an accident. It's vital to remember that it does not cover damage to your own bike. Not having valid third-party insurance can lead to fines or even jail time.

The IRDAI regularly reviews and sets the premium rates for this mandatory cover, based on factors like the bike's engine capacity and the overall claim experience of insurers. Here's a look at how third-party premiums were adjusted in 2022 based on engine capacity:

New bikes also have a mandatory long-term third-party insurance policy, which can be for three or five years. For these long-term policies, premium changes have also been noted, with some categories seeing significant increases.

Mandatory Personal Accident Cover

In addition to third-party insurance, a Personal Accident (PA) cover is also mandatory for all two-wheeler owners. This cover provides financial protection to the policyholder in case of accidental death, disability, or injury. The maximum coverage under this cover, as defined by the IRDAI, is Rs. 15 lakhs for permanent disability or death. It's essential to know that you need a valid driving license to get this cover.

• In case of the policyholder's death due to a road accident, the nominee receives 100% of the sum insured.
• For the loss of two limbs or sight in both eyes, or one limb and one eye, 100% compensation is provided.
• For the loss of one limb or sight in one eye, 50% compensation is provided.
• For permanent total disability, 100% compensation is offered.

This cover acts as a safety net against rising healthcare costs and income loss due to accidents.

Factors That Decide Your Bike Insurance Cost

Beyond the mandatory components, several other things influence the total cost of your bike insurance. Understanding these can help you manage your expenses.

• Type of Bike: Sports bikes or high-end models typically have higher premiums because they are more expensive to repair or replace and are often linked to higher speeds and accident risks.
• Engine Capacity (CC): Bikes with bigger engines usually have higher premiums because they are seen as having more power and speed, which increases the chance of accidents and higher claim amounts.
• Value of the Bike (IDV): The Insured Declared Value (IDV) is the maximum amount your insurer will pay if your bike is stolen or completely damaged. A higher IDV means a higher premium.
• Age of the Bike: Newer bikes generally have higher premiums. As a bike gets older, the premium tends to decrease, though very old bikes might see higher rates due to hard-to-find parts.
• Type of Coverage: A basic third-party bike insurance plan is cheaper than a comprehensive plan, which offers broader protection for your own bike as well as third-party liabilities.
• Add-on Covers: Things like zero depreciation and roadside assistance. Engine protection adds extra coverage but also increases your premium.
• Rider's Details: Your age and riding experience. Riding history (clean record vs. frequent claims) plays a big role. Younger riders might pay more due to higher perceived risk.
• Location: If you live in a big city with more traffic, higher accident rates, or greater theft risks, your premiums are likely to be higher.
• Anti-Theft Devices: Installing approved anti-theft devices can sometimes lead to discounts on your premium.
• No Claim Bonus (NCB): If you don't make any claims during a policy year, you can get a discount on your next year's premium, sometimes up to 50%.

​What Th​is Means for Bike Owners

If the proposed premium hikes are approved, two-wheeler owners will likely see higher costs when they buy new bike insurance or renew their existing policies. This change will make owning and maintaining a two-wheeler more expensive. The impact will be especially felt by those buying new two-wheelers, as the third-party premium is part of the total cost of the vehicle. For everyday commuters and those who use two-wheelers for work, any increase in running costs can be a big worry.

Experts note that even a small increase can affect buying decisions, especially for entry-level two-wheelers, where affordability is key. But industry experts also suggest that these premium adjustments are needed to keep the insurance sector financially stable and ensure that accident victims receive timely and proper compensation. The Indian two-wheeler insurance market is expected to keep growing, driven by more people owning bikes and stricter rules. the growth of digital insurance platforms. The market was valued at USD 5.66 billion in 2025 and is projected to reach USD 8.18 billion by 2031, with a steady growth rate of 6.39%.

Navigating the Future of Bike Insurance

As the insurance landscape shifts, digital platforms are becoming more and more crucial. Many insurers are now offering online services for comparing policies and buying insurance. managing claims, making the process easier and faster. This digital shift is expected to continue, with insurers focusing on creating smooth, easy-to-use online experiences.

In 2024-2025, two-wheeler insurance claims in India increased by 15%, with another 10-12% rise expected in 2025-2026. Mid-segment motorcycles (150 cc to 350 cc) accounted for most of this increase. Electric vehicles (EVs), though a small part of the market, are also contributing to higher claim costs, with EV-related claims being 18-20% more frequent and repairs costing 30-35% more than petrol bikes, mainly due to battery issues.

Maharashtra, Delhi. Uttar Pradesh made up about 45% of claims, with accidents and natural disasters accounting for 70-75% of claims. To prepare for potential premium increases, riders can consider a few strategies:

• Maintain a clean riding record to qualify for discounts.
• Install approved anti-theft devices on their bikes.
• Choose add-on covers wisely, only picking those that are truly needed.
• Renew bike insurance on time to avoid losing benefits like the No Claim Bonus.

CarBike360 Says

A major financial shift is on the horizon as the Indian government is actively reviewing a proposal that could lead to a significant surge in mandatory third-party bike insurance premiums. With discussions pointing towards an average increase of approximately 18%, and some categories potentially facing hikes of up to 25%, millions of riders across the nation could soon see their insurance costs climb. This crucial development, stemming from recommendations by IRDAI to MoRTH, signals a critical period for policyholders to understand upcoming changes and prepare for a potentially pricier ride.