Guide on How Motorcycle Insurance is Calculated | Factors to Consider
Updated:
How Is Motorcycle Insurance Premium Calculated in Singapore?
We released an ultimate guide to motorcycle insurance in Singapore explaining the type of motorcycle insurance, motorcycle insurance excess, some quick tips on how to find the right insurance, factors that affect the insurance premium, insurance renewal and so on.
In this article, we will talk about how insurance providers calculate your insurance premium for your two-wheeler. Here's how motorcycle insurance premiums are calculated and what factors affect the cost:
- The type of coverage -Third-Party Only (TPO), Third Party Fire and Theft (TPFT), or the Comprehensive Plan
- Rider Profile
- Riding Record
- NCD Discount
- Type of motorcycle
- Usage of bike
- Insurance excess
There is no clear-cut formula but most insurance companies have an online calculator you can use to calculate your insurance premium. It’s important to note, that different insurance companies consider different factors.
Let’s look at some of the factors that would affect the insurance premium of your motorbike.
5 Key Factors Influencing Your Motorcycle Insurance Costs
Rider Profile: Age and Experience
Your age and riding experience - are major factors in determining your motorcycle insurance premium. In Singapore, younger riders aged 20 to 29 are statistically more likely to be involved in accidents, which causes insurers to assign higher risk scores and charge correspondingly higher premiums. Additionally, riders with fewer years of riding experience are seen as less predictable and more prone to claims, further increasing premiums. Conversely, experienced riders who have held a license for many years and maintained a clean record are likely to enjoy lower rates.
No-Claim Discount (NCD) and Claims History
The No-Claim Discount (NCD) is a key reward system used by insurers in Singapore to incentivize safe riding. If you maintain a claim-free record, you earn progressive discounts on your annual premium - up to 30% with providers like DirectAsia in Singapore. Riders who have previously made claims may see their NCD reset or reduced, which raises their future premiums. Maintaining a clean claims history is one of the most reliable ways to keep your insurance costs low over time.
Engine Capacity and Bike Value
This goes without saying (but we will say it anyway); How expensive your motorcycle is will also likely determine how high your premiums will cost.
Because high-spec motorcycles can cost the insurance company a lot more to repair or replace as compared to cheaper motorcycles on the market. The make and model of the motorcycle will therefore, impact your premium.
Remember the age factor we spoke about earlier? – How younger riders are likely to pay more; Taking that into consideration, we expect a rider that is 37 years old to pay less if he is using the same motorcycle as a 26-year-old.
But if the 37-year-old gets a more expensive motorcycle, say an exotic two-wheeler or a sports bike, he will likely pay a considerably higher amount for a comprehensive insurance cover. So, do keep this in mind when you decide to get your next bike.
Motorcycle insurance premiums are significantly influenced by the engine capacity and overall value of the bike. Larger engine displacements typically indicate a more powerful and expensive machine, which leads to higher repair or replacement costs int he event of an accident or theft. Insurers consider these elements high-risk, and as a result, motorcycles such as 750cc touring bikes will generally attract higher premiums than 150cc commuter bikes. Similarly, bikes with luxury features or imported models carry higher values, which also drives up the insurance cost.
Usage of the Bike
Is this a personal or commercial motorcycle? The purpose for which you use your motorcycle also affects how much you pay. b
Personal bikes used occasionally for commuting or leisure are seen as lower risk compared to motorcycles used for commercial delivery or courier services. Whereas commercial motorcycle premiums will be a lot higher because of the frequency of use which higher riding time statistically means higher exposure to more accidents and potential claims. In fact, some insurers in Singapore do not even provide cover for two-wheelers that are used for commercial purposes.
Insurance companies also calculate how often a privately owned motorcycle is used. If you use your motorbike daily, the premium will be higher compared to a rider that may not take the bike out for a ride every day.
Motorbike Insurance Excess
You can lower your motorbike premium if you choose to shoulder some risks. We call this an excess fee.
This is the amount you will pay upfront, before the insurance company pays for a claim. Say, if you pay an excess of $1000, and the damage on your motorcycle costs $7000. The insurance company will bear the balance $6000 in repair costs.
The higher the excess you’re willing to pay, the lower your motorcycle premium will be.
How to Use an Online Motorcycle Insurance Premium Calculator?
All the factors mentioned above are taken into consideration when determining your motorbike insurance premium. But how can you actually calculate what your premium will be?
Direct Asia has an online calculator that can help you approximate how much your motorcycle insurance premium would be, based on the information you give.
Fill in the correct information about the make and model of your motorcycle, your No-Claim Discount rating, two-wheeler usage time, rider profile and other information required to get an accurate quote.
Final Thoughts
Taking all things into consideration, it is certainly advisable to get premium insurance under the Comprehensive plan or at least, the TPFT insurance cover. That way, you can be sure that you and your motorbike are well protected, if you ever meet with an accident while riding. Also, bear in mind that getting an exotic motorcycle or superbike may not be the best option for you because of the premium it requires. You may want to pick a more affordable motorbike with a lower premium and maintenance fee, especially if you are a new rider.
