Planning to purchase a two-wheeler? Apart from vehicle specifications and models, which excite you the most, another aspect that deserves your attention is two-wheeler insurance. Read this article to know everything you'll ever need to know about this must-have insurance policy.
Cost-efficiency, maneuverability, affordability, and convenience have made two-wheelers a highly popular mode of transport in India. Whether you'd like to make the everyday commute more comfortable or do your chores with ease, a two-wheeler is an excellent choice.
These days, there are so many types of two-wheelers, both fuel and battery-powered, available in the market to match your budget and requirements. But apart from choosing the right bike, there is one more factor that you need to consider- two-wheeler insurance.
Under the Motor Vehicles Act, 1988, it is mandatory for every two-wheeler to have valid third-party insurance. Let’s go deep into the facts about two-wheeler insurance.
What is Two-Wheeler Insurance? Simple!
Two-wheeler or bike insurance is an agreement between the insurance provider and the vehicle owner. Under the agreement, the insurance provider agrees to cover the cost of damages to the vehicle, a third party, or even the vehicle owner in some cases, up to a certain extent, in return for timely premium payments from the owner.
Once purchased, the policy is valid for a minimum of 1 year. Nowadays, many insurers offer policy periods for the long term also. You should always renew your policy before expiry to remain protected.
What are the Different Types of Two-Wheeler Insurance?
There are two types of two-wheeler insurance- Third-Party and Comprehensive Policy. Here's what they mean-
What is Third-Party Insurance?
As the name suggests, a third-party insurance policy only offers cover for damages or injuries caused to someone else due to an accident involving the owner's vehicle.
According to the Motor Vehicle Act, third-party insurance is mandatory for every two-wheeler in India. For newly purchased two-wheelers, 5-year third-party insurance is mandatory. The IRDAI decides the two-wheeler third-party insurance rate.
What is Comprehensive Bike Insurance?
A comprehensive two-wheeler policy is also known as Own Damage insurance. It is a type of two-wheeler insurance offering a wider protection scope. Besides mandatory third-party coverage, it also offers financial protection to your own vehicle.
As these plans offer more comprehensive coverage, they are more expensive than the basic third-party policies. New bike owners can purchase comprehensive insurance with 3-year or 5-year validity. Insurers are responsible for fixing the premiums of comprehensive plans.
The difference between comprehensive and third-party two-wheeler insurance is that third-party insurance only covers third-party liability, while comprehensive insurance covers third-party liability and your own damage, both. Also, IRDAI decides the premium for third-party insurance and this is the same across all insurers, whereas companies themselves decide the premiums for Comprehensive insurance, and this changes as per the insurance providers.
What’s covered? A lot!
The policy cover depends on the type of bike insurance you've purchased. Take a look at what is covered under two-wheeler insurance-
Third-Party Bike InsuranceAs mentioned above, third-party plans only provide coverage for damages and injuries caused to other parties due to an accident involving your two-wheeler. With a third-party plan, you'll be covered for-
- Legal liabilities arising from physical injuries caused to others
- Legal liabilities arising from the death of another individual/s
- Legal liabilities arising from the damages caused to other vehicles
- Legal liabilities arising from property damage
With comprehensive bike insurance, you get coverage for third-party damage, along with your own expenses that arise from an accident involving your two-wheeler. You'll be covered for
- All the legal liabilities covered in third-party bike insurance
- Financial losses suffered by you when the bike is damaged due to a natural disaster such as floods, lightning, earthquakes, etc.
- Financial losses when the bike is damaged due to a man-made cause such as fire, malicious acts, etc.
- Financial losses due to theft of your bike
Apart from the cover listed above, with both third-party and comprehensive bike insurance plans, it is mandatory to purchase a Personal Accident (PA) cover, which offers financial insurance of up to Rs. 15 lakhs.
What isn’t covered?
- Apart from bike insurance benefits and inclusions, it is also important to know what is excluded or not covered in the policy. Here's a list of basic two-wheeler insurance exclusions-
- Any loss or damage caused to the two-wheeler due to over-speeding or not following traffic rules
- Accidents that happen when the two-wheeler is used under the influence of alcohol or drugs
- Any loss or damage caused to the two-wheeler or a third party when riding outside India
- Any loss or damage that happens when the bike is in the control of an underage or unauthorized rider
- Any loss or damage caused to the two-wheeler if it is being used for non-stated purposes
- Anything that happens after the insurance lapses
- War, terrorist attacks, invasion, nuclear attack, etc.
- Mechanical or electrical failure
- Normal wear and tear of two-wheeler parts
- Vehicle depreciation
- Consequential losses
What are Add-ons? We call them must-haves!
With the help of add-ons, you can expand the coverage of a comprehensive insurance plan further. You can add a variety of add-ons to your comprehensive policy by paying a slightly higher premium.
Here are some of the most popular two-wheeler add-ons you should know about-
Depreciation ProtectionDepreciation protect or zero depreciation is the most commonly purchased insurance add-on. The add-on enables policy owners to get the entire claim settlement amount without any money getting deducted due to depreciation.
Return to Invoice Cover
With a return to invoice cover, an insured bike owner can receive the full invoice value of the vehicle if it is totalled or stolen. Moreover, it also covers the registration charges and road tax to help you purchase a similar new two-wheeler.
Pillion Cover
The pillion protection covers the pillion rider in case of an accident. It offers protection against the pillion rider's injury, disability, and death.
Consumable Expenses Protect
If the insured two-wheeler is damaged due to a risk covered under the policy, the insurer will also pay for the consumables needed during the repair. The consumables include AC refrigerant, AC gas oil, engine oil, power steering oil, radiator coolant, etc.
Emergency Medical Expenses Protect
With this add-on, the insurance policy will also cover emergency medical expenses to treat bodily injuries sustained in an accident. Treatment expenses of the hospital and even ambulance charges are covered!
What is NCB in Bike Insurance?
The No Claim Bonus or NCB is an added advantage of comprehensive two-wheeler policies. By not making any claim in a policy year, you are entitled to receive a bonus in the form of a discount on your renewal premium. The discount increases with every claim-free year, up to a maximum limit.
The NCB premium discounts are as follows-
| Claim-Free Years | NCB % |
|---|---|
| One Claim-Free Year | 20% |
| Two Successive Claim-Free Years | 25% |
| Three Successive Claim-Free Years | 35% |
| Four Successive Claim-Free Years | 45% |
| Five Successive Claim-Free Years | 50% |
As seen above, you can earn a maximum of 50% NCB in bike insurance by not making any insurance claims for five or more successive years. Of course, you should remember that no matter how long you've not claimed for, the NCB will become zero even if a single claim is made.
These terms are as important as road signs!
Insurance products are not the easiest to understand, especially if you're purchasing one for the first time. To help you understand your two-wheeler insurance better, here's a list of some of the most important terms you should know about-
Compulsory DeductibleThe compulsory deductible is a claim amount not paid by the insurer. If you make a claim, you need to pay this bit while the insurer will pay the remaining amount. The IRDAI decides the compulsory deductible, which applies to all two-wheeler insurance policies. Currently, the compulsory deductible set by IRDAI for two-wheelers is Rs. 100.
Voluntary Deductible
Policy owners can also opt for a voluntary deductible. While the voluntary deductible increases your out-of-pocket expenses in case of an accident, it certainly helps reduce the policy premiums.
IDV
Insured Declared Value or IDV in bike insurance means the maximum cover available in a comprehensive plan. It is the most an insurer will pay if the vehicle is totalled or stolen. Insurers deduct depreciation from the vehicle's current market value to calculate IDV.
Depreciation is the reduction in value of your vehicle with time. The IRDAI has fixed the depreciation rate according to the age of the vehicle. Take a look-
| Vehicle Age | Depreciation Rate |
|---|---|
| Up to 6 Months | 5% |
| 6 Months to 1 Year | 15% |
| 1 Year to 2 Years | 20% |
| 2 Years to 3 Years | 30% |
| 3 Years to 4 Years | 40% |
| 4 Years to 5 Years | 50% |
If you're about to purchase insurance but don't know the depreciation rate for your vehicle, you can use an online IDV value calculator for bike.
Network GarageLeading insurers have tie-ups with an extensive network of garages where policyholders can take their two-wheelers for cashless repairs in case of an accident. If you get repairs done at non-network garages, you first pay for the repairs and then make a claim for the insurer to pay you back.
How are comprehensive insurance premiums worked out?
These depend on factors such as-
- Model -
Insurers have a higher financial liability on more expensive vehicles. As a result, an insurance plan for a high-end bike is more expensive.
- Year of Manufacture -
Older bikes have a higher depreciation rate and lower IDV. So, the premium for an older bike is generally lower than that of a recently launched model.
- Engine Capacity -
Like with third-party bike insurance, the vehicle's cubic capacity is a key factor for calculating premiums of comprehensive plans.
- Registration Location -
Premiums for bike insurance policies purchased in metro cities are generally higher than premiums in non-metro cities.
- Add-ons -
Add-ons are an excellent way to expand the cover available under your policy. However, they slightly increase the policy premium.
Claiming: it’s much easier than learning to ride!
Leading insurers in the country have made the claim filing process very easy and quick. While the steps to file a claim can be slightly different for different insurance providers, here's a quick overview of the bike insurance claim process you can follow in case of an accident-
- Contact the insurer
- Take the vehicle to the nearest network garage for cashless repairs
- If a network garage is not available nearby, the bike can also be repaired at a non-network garage after informing the insurer about the same
- A surveyor from the insurance company will visit the garage for a two-wheeler insurance check and verify the extent of damage
- Based on the survey, the surveyor will submit a claim report to the insurer
- The insurer will assess the claim report before approving the repairs
- After receiving the approval, the garage will repair the bike
- If it is a network garage, the insurer will settle the repair bill directly with the garage
- For a non-network garage, you'll have to pay the garage bill and then get the amount reimbursed from the insurer
For third-party two-wheeler insurance claims, you'll have to file an FIR, after which the claim is taken to the motor accidents tribunal for figuring the liability. The insurance company makes the claim payment to the third party based on the judgment.
Even in the case of a bike theft insurance claim, an FIR should be filed. The police will provide a certificate if the bike cannot be found. The certificate should be submitted to the insurance company for claim payment.
Claiming? Get the paperwork right!
Here‘s the list of documents you’ll need for a claim:
- Claim form
- Policy documents
- RC book
- Driving license
- ID proof
- PUC certificate
- Police FIR (for third-party and two-wheeler theft insurance claim)
You can also check the official website of your insurer to know more about the documents needed for two-wheeler insurance claims. Once a claim is filed, you can also contact the insurer to know the bike claim status.
"I'm convinced! How do I buy a policy?"
Most people now prefer buying two-wheeler insurance online as it is more convenient and quick. Moreover, online policies are cheaper than offline ones. So, how do you buy bike insurance online? Follow these steps-
- Visit the official website of your preferred insurer
- Enter details of your bike, like registration number, model, year, registration state, etc.
- Choose from the various plan options offered by the insurer
- If you're buying a comprehensive plan, you can also customize the policy with add-ons
- After selecting the plan, you can pay the insurance premium online
- After your payment is confirmed, the insurer will issue the policy
Renewing online isn’t very different from buying.
You can follow the same steps listed above to apply for bike insurance renewal online. You also have the option to change the insurer at the time of renewal. If you’ve earned an NCB, don’t worry – that will be transferred to your new insurer.
Renew just before the current policy expires to remain protected at all times. After expiry, you have a grace period of 90 days, within which you can renew the policy and retain the current benefits like NCB. But hey, your bike isn’t covered during this period, and riding a two-wheeler with expired insurance is a punishable offence!
How do you choose who to ‘ride’ with?
Now that you know everything about two-wheeler insurance, you can start looking for a good insurer. While buying, focus on the reputation, claim settlement ratio, policy features, available add-ons, premium, and claim filing procedure before you finalize.
Also, don't forget to go through the policy wordings before paying the premiums, so that you're well aware of all the inclusions and exclusions of the policy. Once you receive the policy documents after the purchase, check them thoroughly to avoid any problems later.
Enjoy every journey more when you’re properly insured!
