IRDA Rules for Two-wheeler Insurance Policies in India

IRDA (Insurance Regulatory and Development Authority of India) is the highest authority that looks after all the insurance-related rules and regulations. The rules and regulations laid out by IRDA help to maintain a smooth rapport between the insurance company and the policyholder. In this article, we have discussed the IRDA rules for 2-wheeler insurance policies.

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Why Does It Require?

Insurance is a contract that expects to be fair from both sides. That is why all General Insurance companies are advised to follow these guidelines while offering a policy to avoid future consequences. Given that, if you are planning to buy a two-wheeler and are new to the insurance world, the below-discussed guidelines will help you make the journey pleasant.

IRDAI Guidelines for Bike Insurance Coverage

Right from introducing new rules to deciding insurance premiums, IRDA makes sure that every customer perceives the right information. The two-wheelers usually include- scooters and motorcycles.

Usually, there are two types of two-wheeler insurance plans offered-

  • Third-Party Liability Insurance
  • Comprehensive Insurance

Types of Bike Insurance Coverage as Per IRDA

All the 2-wheeler insurance covers offered by different Indian insurers are subjected to follow IRDA rules.Below are both types of 2-wheeler insurance covers explained along with their respective guidelines to be followed-

  1. Third-party Bike Insurance

    As per the Motor Vehicles Act of 1988, all two-wheeler owners must hold at least third-party liability insurance, and it is the most basic form of the insurance policy. However, the coverage under this policy only compensates for third-party liabilities such as death, injury, or property damage caused to the third party in an accident.

    Inclusions of Third-party Bike Insurance

    According to the IRDA guidelines, below are the inclusions of a third-party bike insurance policy-

    • In the case of injury or death caused to the third party, the compensation is provided by the insurance provider
    • In case of death, the compensation is calculated based on the deceased individual's age, income, profession, and health
    • In case of a third party's property damages, the monetary compensation is calculated as per the intensity of the damages.
  2. Comprehensive Bike Insurance

    Comprehensive bike insurance is extensive coverage. It offers compulsory third-party liability cover along with an Own Damage (OD) cover. The Own Damage (OD) offers financial protection against several unforeseen damages caused to the own vehicle due to accidents, natural calamities, man-made disasters, theft, and fire.

    Inclusions of Comprehensive Bike Insurance

    According to the IRDA guidelines, below are the inclusions of a comprehensive bike insurance policy-

    • Loss or damage to the insured vehicle due to man-made disasters such as burglary or theft, riot, strike, etc.
    • Damage or loss due to natural calamities such as fire, explosion lightning, inflammation, earthquake, flood, storm, hurricane, etc.
    • Damage to the insured vehicle in case of an accident
    • Third-party liabilities arising out of accidental damage, injury, or death
    • Personal accident coverage up to Rs 15 lakh

    Exclusions of Comprehensive Bike Insurance

    According to the IRDA guidelines, a comprehensive bike insurance policy does not provide any compensation under the following conditions-

    • Consequential loss, normal wear & tear, damage due to age, mechanical breakdown
    • In case of an accident, if the driver is not carrying a valid license, RC, or 2-wheeler insurance policy
    • The accident happens while driving under the influence of alcohol or other intoxicating substances
    • Any loss sustained outside the geographical area is not covered
    • Any claim arising from contractual liability.

    Note- These exclusions are a part of every basic two-wheeler insurance policy. However, it is highly recommended to go through the policy-fine print thoroughly to avoid any consequences while raising bike insurance claims.

Personal Accident Cover or Owner Driver Cover

As per the latest amendment by IRDA, the limit of mandatory personal accident cover for two-wheeler insurance is raised to Rs 15 Lakh. It can be availed against an annual premium of Rs 750.

These rules will be applicable for both comprehensive and third-party liability coverage. The policy covers the owner-driver for accidental death, permanent total disability, permanent partial disability, and temporary total disability due to an accident. The PA cover rules include the following coverage-

Coverage Compensation Percentage
Loss of both limbs or eyes 100%
Loss of one limb or one eye 50%
Loss of one limb and one eye 100%
Death 100%

Note- There are four different situations mentioned above. However, one can claim works for only one condition at a time.

Other Conditions of Personal Accident Cover

  • The total liability of the company cannot be more than Rs 15 Lakh at one time of processing the claim
  • The policyholder is not eligible to file a claim if the accident is a result of self-harm, attempted suicide, infirmity, or even a physical defect
  • The policyholder is not eligible to file a claim if the accident is due to the influence of either drugs or alcohol
  • The sum assured payable to the registered nominees or the legal representatives of the policyholder in case of death
  • The coverage is provided only if the owner/driver holds a valid driving license (DL).

IRDA New Bike Insurance Rules

The IRDA's new bike insurance rules were released in 2020 and include the following conditions-

  1. When the offense committed by the two-wheeler rider is not mentioned specifically in the new rules, then the fine of Rs 500 for the first offense and Rs 1,500 for the repetition of the offense is charged
  2. If the bike rider fails to abide by the rules related to the road, it will attract a challan of Rs 500-1,000
  3. If the biker does not cooperate with the traffic cops or respective authorities, they will be charged a fine of Rs 2,000 additionally for this behavior
  4. If the biker is caught with an inactive or invalid driving license will be imposed a heavy penalty of Rs 5,000
  5. When the rider is riding their vehicle despite the disqualification or suspension will be charged a hefty fine of Rs 10,000
  6. Over speeding attracts a fine of Rs 1,000
  7. Rash driving attracts a challan of Rs 1,000 and/or imprisonment of 6 months.

Other General Exceptions

Here are other exceptions, which are a part of the IRDA guidelines set for the two-wheeler insurance policy-

  • The insurer is not responsible for paying the claim if the insured vehicle meets with an accident out of the covered geographical area
  • The insurance provider will not process the claim if the vehicle is used above its limitations
  • If the name of the driver on the driver’s license and the claim form does not match, the claim will be rejected.

Depreciation Rules Given by IRDA

IRDA also has some set rules for calculating depreciation, which are mentioned in their guidelines. The percentage of depreciation applied in the various parts is as below-

Parts of the Bike Depreciation Applicable
Fiberglass components 30%
Rubber, Nylon, Tubes, Batteries, Plastic parts 50%
Glass parts 0%
Metal parts As per the depreciation mentioned in the policy

Note- For the complete list, refer to your policy document and the guidelines given.

Schedule of Depreciation for Insured Declared Value (IDV)

IDV or Insured Declared Value plays a crucial role while deciding the bike insurance premium. IDV in the insurance refers to the current market value of the vehicle and based on it the sum insured is fixed.

Moreover, the depreciation rate applies to the Insured Declared (IDV) value as well. It depends upon the age of the vehicle. The depreciation percentage starts with a slab of six months to ten years. You can refer to the below table to check how depreciation is applicable as per the age of the vehicle-

Age of the Bike Depreciation Percentage
Up to 6 months 5%
6 months to 1 year 15%
1 to 2 years 20%
2-3 years 30%
3-4 years 40%
4-5 years 50%

Note- The IDV for vehicles above five years old and the discontinued model is decided based on the mutual agreement between the insurance provider & the policyholder.

Mandatory Documents to be Carried While Riding a Bike

The following is a list of mandatory documents decided by the Government of India (GOI) that you have to carry while riding your two-wheeler. For your convenience, you can upload these documents in Digilocker and present them during the inspection by the traffic cops.

  1. 2-wheeler insurancepolicy documents
  2. Driving License (DL)
  3. Registration Certificate (RC)
  4. Pollution Under Control Certificate (PUCC)

IRDA Guidelines for Bike Insurance Renewal

Here are a few points given by IRDA for two-wheeler insurance renewal-

  1. For seamless coverage, the policy needs to be renewed on time
  2. No claims will be entertained when the damages incurred to the insured vehicle after the date of expiry of the policy
  3. The accumulated bonus or No Claim Bonus (NCB) becomes void if the policy is not renewed within 90 days from its expiry date.

The IRDA has also defined the turn-around time for grievance redressal of motor insurance-related queries. You can refer to the below table that showcases defined deadlines for grievances-

Status of Grievance Duration
Acknowledging the grievance 3-working days
Resolving the grievance 15 working days
Two-wheeler insurance processing and cancellation grievance 15 working days
Claim settlement 30 days

Additional Points to Remember

The objective of IRDA is to facilitate seamless, transparent, and organized insurance provisions for buyers in India. Here are a few additional points that you should keep in mind while buying a bike insurance policy-

  • The insurer needs to follow the guidelines set by the IRDA to be fair to the insurance buyers
  • While buying a policy, you can check its authenticity by going through its terms and conditions
  • Moreover, only look for IRDA-approved websites to buy bike insurance online.

In a Nutshell

As a two-wheeler insurance policy buyer, you ought to know these guidelines. While the guidelines mentioned above are a general set of guidelines, you should also check the policy document for the terms and conditions of a particular policy.

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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^The renewal of insurance policy is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. Actual time for a transaction may vary subject to additional data requirements and operational processes.

^The buying of Insurance policy is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. Actual time for transaction may vary subject to additional data requirements and operational processes.

#Savings are based on the comparison between highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB.

*TP price for less than 75 CC two-wheelers. All savings are provided by insurers as per IRDAI-approved insurance plan. Standard T&C apply.

*Rs 538/- per annum is the price for third party motor insurance for two wheelers of not more than 75cc (non-commercial and non-electric)

#Savings are based on the comparison between the highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB.

*₹ 1.5 is the Comprehensive premium for a 2015 TVS XL Super 70cc, MH02(Mumbai) RTO with an IDV of ₹5,895 and NCB at 50%.

*Rs 457/- per annum (1.3/day) is the price for the third-party motor insurance for private electric two-wheelers of not more than 3KW (non-commercial). Premium is payable on an annual basis