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5 Things You Must Know About Bike Insurance before Buying

Before buying a two-wheeler insurance plan, you should consider various factors. The mileage, comfort, maintenance cost, serviceability and price are some of the factors that affect the purchase of your vehicle. As you consider various options before buying a two-wheeler, you should consider the insurance plan as well. As two-wheeler insurance is mandatory, you can buy the mandatory liability-only policy or comprehensive plan. A comprehensive plan will cover all kinds of expenses so that there will be great peace of mind.

Importance of Two-Wheeler Insurance Policy

You should buy a two-wheeler insurance policy as per the Motor Vehicles Act, 1988. As per the law, it is necessary to buy ‘third-party’ insurance cover. The ‘third-party’ insurance will help you pay damages to the third party. The damages to the third person or the two-wheeler will be covered by the insurance policy. It will not cover the damages to the two-wheeler or personal damage.

As you know very well about the two-wheeler and its performance, you should be aware of the two-wheeler insurance policy as well.

There are many aspects addressed by the two-wheeler insurance plan.

Type of Cover

Third-Party Cover - It covers the damages to the third party person, vehicle or property. It will not cover own damage such as rider, pillion or policyholder’s vehicle or vehicle owner.

Comprehensive Cover - In addition to the third-party cover, the bike insurance will cover the policyholder, rider, own vehicle and various options as selected by the policyholder. Even though the insurance premium is high for comprehensive cover, it will cover various risks. Hence, you can choose a value-for-money product after comparing various products available in the market.

Factors Which Influence the Premium

The following factors will influence the insurance premium of a two-wheeler:

  • Make and model of the two-wheeler
  • The engine capacity
  • City of registration
  • Type of cover (third-party or comprehensive)
  • IDV
  • Safety devices
  • Traffic violations of the vehicle-owner
  • Purpose of the vehicle (personal or commercial use)
  • Annual premium or long-term premium
  • Automobile association membership
  • Bonus or discount offered by the insurance company
  • Online/offline insurance policy

Important Factors

You should be aware of the following 5 important factors which will influence the insurance premium.

1. IDV (Insured Declared Value)

IDV will be mentioned by the insurance company and you can find it in the insurance policy issued by the insurance company. The insurance company will arrive at the IDV as per the market value after adjusting against the depreciation.

The depreciation of the two-wheeler will be calculated as follows:

Age of the vehicle

% of depreciation

Less than 6 months

5%

Above 6 months and less than 1 year

15%

Above 1 year and less than 2 years

20%

Above 2 years and less than 3 years

30%

Above 3 years and less than 4 years

40%

Above 4 years and less than 5 years

50%

 

The insurance company’s liability is up to the IDV mentioned in the insurance policy. hence, you should opt for higher IDV as far as possible so that you will get the highest possible compensation when you met with an accident or damage to the vehicle.

2. No-Claim Bonus

If the insurance policy is not claimed in the previous policy year you will get a no-claim bonus while renewing the policy. The no-claim bonus will be reduced from the total insurance so that there will be great savings to the policyholder. The no-claim bonus will increase with each claim-free year. The no-claim bonus will be in between 10% and 50%. If you claim the policy in the third year after the purchase of a vehicle, the no-claim bonus will be zero while renewing the policy for the fourth year. It will be applied again from the fifth year starting with the lowest percentage of no-claim bonus.

3. Add-On Covers

You can enhance the coverage of the insurance policy by including add-on covers. Collision insurance, pillion rider coverage and fire cover can be obtained as add-on covers. The insurance premium will increase with the inclusion of the add-on cover. If you have a specific risk factor, it should be covered by the insurance policy.

4. Deductible

There are two types of deductibles. They are voluntary and compulsory deductibles. The voluntary deductible will be applied over and above the compulsory deductible. You should contribute to the voluntary deductible to decrease the insurance premium. However, it will reduce the claim settlement amount for the insured.

5. Online Insurance

It is very easy to buy two-wheeler insurance online. You can buy a new policy as well as renew an existing policy online. When you buy a policy online, the insurance company will give a discount on the premium. You can get discount about 5% to 10% on the premium.

Tips to Buy and Renew the Two-Wheeler Insurance Policy

The tips shared by experts will help you buy the two-wheeler insurance policy at the best price. You will also be able to renew the policy at best price so that you can make the most of your investment.

  • Transfer of Two-Wheeler Insurance Policy - After buying a second-hand vehicle, you should not forget to transfer the insurance policy. As you transfer the ownership of the vehicle, you should transfer the insurance policy as well. If you do not transfer the insurance policy, you will not enjoy the benefits of the insurance. When your bike is left uninsured, you will pose risk to the vehicle and the third party. There will not be a penalty by transferring the policy within the timeframe set by the IRDAI. On the other hand, you can buy a new policy as well.
  • Renewing the Policy before the Due Date - The policy should be renewed on or before the due date. If you renew the policy after the due date, you will not get special benefits extended by the insurance company. If you renew the policy before the due date, you will get a discount on the premium. For example, you are entitled to a no-claim bonus if the policy was not claimed in the previous policy year.
  • Failure to renew the policy before the due date will be treated as new policy and the vehicle should be assessed by the surveyor. Hence, even though there is one day delay in renewing the policy, you will forego the benefits.
  • Avoid Claiming the Policy for Minor Repairs - For minor repairs, you should avoid claiming the insurance policy. If the vehicle repair cost is few hundreds, you can repair the vehicle by paying from your pocket. When you claim the policy, the premium rate will increase while renewing the policy. The no-claim bonus will become zero. Hence, you should take the best step to preserve the no-claim bonus and to reduce the annual premium.
  • Selection of Correct IDV - You should select correct IDV as per the current value of your vehicle. If the IDV is high, you will get higher compensation from the insurance company. If the vehicle is stolen or damaged, the IDV mentioned in the policy will become the basis for the finalization of compensation. If IDV is high, the compensation will be high. Hence, you should choose the most appropriate IDV while buying or renewing the bike insurance
  • Intimation of the Claim - If you met with an accident, you should inform the insurance company or the agent at the earliest. Most of the insurance companies stipulate that the information should be shared with the insurance company within 24 hours to 48 hours after the accident.
  • Choose the Correct Insured Name - You should choose the correct insured name as per the registration of the vehicle. If you fail to pay due attention to the name mentioned in the policy, you may not get the benefits of the insurance policy.
  • Nominee - The nominee should be included with the two-wheeler insurance policy. If the policyholder dies, the insurance benefits will be paid to the nominee. You can change the nominee particulars at any time after buying the insurance policy.
  • Hypothecation - If the vehicle is under hypothecation due to loan or other factors, the information should be shared with the insurance company. If you provide incorrect information, you may face legal issues. To avoid all kinds of legal battles, you will want to provide accurate information about the ownership and financing of the vehicle.
  • Correct Person Details - You should enter accurate personal details while buying or renewing the insurance policy. If there is a change in name, location or another factor, the information should be updated with the insurance company. Failure to update the details will lead to cancellation of the policy. The insurance company may deny the claim as well.
  • Collision Coverage - Your vehicle may not be damaged due to a collision between two vehicles. There are instances where the bike will jump into the movable and immovable property. The damage occurred to the life or property will be paid by the insurance company. Hence, you should subscribe to collision coverage which falls under the add-on cover to an insurance policy.
  • Change of Vehicle - There are chances to buy a new bike in which case, the existing policy can be carried forward to the new vehicle. The premium will be adjusted by the insurance company on a pro-rata basis. This facility will be extended by the insurance company if the value of the previous bike is the same as that of the new bike.

How to Buy Two-Wheeler Insurance?

You can buy a two-wheeler insurance plan from the insurance company directly. You can approach the branch or agent to get an insurance policy. It is also possible to buy an insurance policy online by entering a few details about your vehicle.

To buy the insurance policy at the best price, you should compare the insurance policies offered by various companies. The price comparison websites will help you in this direction. You will understand the features as well as price so that the best bike insurance that fulfils your needs can be purchased very easily.

One Year vs. Long-Term Policy

Most of the insurance companies offer a two-wheeler insurance plan for one year. The policy should be renewed on annual basis. The premium will increase or decrease as per the claim history.

If you buy a long-term two-wheeler insurance plan, the annual premium will be the same for all years. A long-term insurance policy will be issued up to 3 years. When you buy a long-term insurance policy, you will not want to renew the policy on annual basis.

When you go for a 3-year insurance policy, the policy can be renewed for every three years. If you claim the insurance policy, the NCB will be reduced but it will not become nil. You can enjoy mid-term cancellation refund with the insurance policy.

Exclusions of a Two-Wheeler Insurance Policy

The following factors are not considered for the two-wheeler insurance plan:

  • Mechanical or electrical breakdown of the vehicle
  • Normal wear and tear
  • Aging of the vehicle
  • Wear and tear of consumables such as tires and tubes (unless the vehicle is damaged)
  • Loss or damage of the vehicle due to the act of terrorism or war
  • Damage to the vehicle by a person driving without a valid driving license
  • Damage to the vehicle by a person driving under the influence of alcohol or drugs
  • The private vehicle being used for commercial purposes

Conclusion

Two-wheeler insurance plans are available at an affordable price. There are various plans offered by reputed insurance companies in India. The vehicle insurance can be purchased as per the type, class and maker. An insurance company will assess various kinds of risk factors associated with the vehicle, vehicle owner (or rider) and location of the vehicle. You can buy a comprehensive insurance policy on a brand new vehicle to cover all kinds of possible risks. With the best bike insurance, you will cover various risk factors and there will be absolute peace of mind!