What to prioritise when budgeting for both car and bike insurance

When prioritising between insurance for your car and bike, your aim must be to stay legally compliant with third-party insurance. Further, prioritise your coverage for both vehicles, depending on your usage and budget.

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However, various other reasons and factors such as current market price, available discounts and the Depreciation rate of each vehicle can help determine which type of policy you need when it comes to bike and car insurance.

How to Balance Your Priorities for Car and Bike Insurance?

There are a lot of factors that you must consider systematically. This will help you buy the best insurance policy for both of your vehicles within your budget. Here are the factors to consider to get to your final decision on the policy without missing out on any of those factors.

1. Check the Third-Party Liability First

Whatever combination of coverage you buy in your car and bike insurance, Third-party insurance is mandatory for both vehicles. This is the minimum requirement you have to buy to drive legally in India as per the Motor Vehicles Act of 1988.

2. Assess your Risks 

Now, if you still have a substantial budget left after considering third-party cover, analyse the risks to your bike. If you live in a hill station with a risk of landslides or in a locality with recent news of car theft, buying comprehensive coverage is the smarter choice.

3. Choose Your Coverage Pattern 

Since you know the probable threats now, choose the coverage keeping a proper balance between the coverage and cost. You can choose your coverage pattern by getting a comprehensive plan, buying add-ons or regulating the IDV of your bike or car insurance.

4. Analyse Competitive Vehicle Insurance Providers 

Most vehicles have similar coverage patterns for car and bike insurance. However, the price for the same coverage might differ from one insurer to another. Hence, make sure you compare policies from different insurers and choose the best one, considering their Claim Settlement Ratio (CSR).

5. Check Your Budget and Buy 

Once you have finalised the insurance you are buying, check if the final price is within your budget and make the payment.

Factors Determining the Coverage Priority for Your Car and Bike Insurance

There are many factors that you can consider to finalise the amount of coverage you are going to buy:

1. Insurance Period

All cars and bikes have a validity of three years and five years, respectively, of third-party liability in their policy during the initial purchase. Now, people who thought of a yearly plan might uplift their budget after knowing the real validity of a policy.

2. Driving Habits 

If you are a safe driver/rider with a minimum number of claims made or traffic laws broken, your insurance cost might be less than that of others. This can help you purchase more coverage within your budget.

3. Vehicle Usage 

Suppose you use your bike for local use and your car for your daily commute. In that case, you must get higher coverage for your car, as the car is at a higher risk than your bike. 

4. Price Constraint 

The price of comprehensive insurance is higher than that of a third-party plan. Now, if you can only afford a comprehensive plan for one vehicle, prioritising your car is the better option, as car parts are costlier. 

5. Vehicle’s Age or IDV 

Your car’s age and IDV are directly proportional. Your car ages every day you use it, and it depreciates up to 50% in 5 years. Since you receive claims depending on the percentage of depreciation, it is best to buy a comprehensive plan for the newer vehicle.

What Should You Prioritise When Budgeting for Both Car and Bike Insurance

Analysing your risk factors, driving behaviour and exploring coverage options from different insurers helps you get the best value for money. However, your first priority should be to remain legally compliant with third-party insurance for both.

Your next aim should be to buy comprehensive insurance for the vehicle you drive the most, or prioritise your car, as car parts are more expensive.

If you have a comprehensive plan for both, you can prioritise your car for add-ons such as zero-depreciation cover or others, as per your needs.

Final Thoughts

Buying a planned insurance cover is a smart choice even if you do not have a budget. This helps you to make an economical choice in the long run and benefit from your policy.

Remember, vehicle insurance is a crucial investment, and your budget and priorities can change with time and the age of your car. Hence, make an informed decision about your insurance coverage every time you renew your policy.