Is It Mandatory to Buy Bike Insurance from Bike Dealers?

Is Bike Insurance Mandatory in India?

Yes, you must have bike insurance, but you don't have to buy it from the dealer.

According to the Motor Vehicles Act, 1988, every two-wheeler in India is required to have a third-party bike insurance policy to ride legally on public roads. Without valid two wheeler insurance, your bike cannot be registered, and riding it may result in penalties or fines.

Should You Always Buy Two-Wheeler Insurance from a Dealer?

Getting your dream bike is exciting, and it's normal to bargain for the best price. Dealers often include bike insurance with the purchase, sometimes calling it a discount or even a “free“ extra.

In India, dealers often offer bundled bike insurance instead of giving cash discounts. But buying insurance from the dealer is your choice, not a requirement. According to the Competition Commission of India (CCI), you can buy motor insurance from any insurer or platform you like, and dealers can't force you to take their in-house insurance.

You can buy two wheeler insurance from the dealer when you first purchase your bike, and this might be convenient for some people. Just remember, you're not limited to the dealer after that.

When Can You Buy Bike Insurance and Switch Later?

You can buy bike insurance:

• Before vehicle registration, as two wheeler insurance is mandatory for RC issuance
• On the day you get your bike, you can also buy insurance instantly online from any insurer. For example, you can visit the Policybazaar Insurance Brokers Private Limited website to compare plans from different insurers and pick one that fits your needs and budget.

More importantly, at the time of bike insurance renewal, you are completely free to:

• Renew your bike insurance policy directly with an insurer.
• Switch to another insurer.
• Buy or renew bike insurance online through any digital platform.

This flexibility lets you compare prices, adjust your coverage, and pick add-ons that work best for you.

Is Dealer-Provided Bike Insurance Really Free?

A two-wheeler insurance policy is never really free. Insurance is a financial contract, so you pay a premium for coverage. When dealers say they offer "free insurance," the cost is usually included in the bike's price or charged at the regular premium rate.

Often, these offers only cover the first year. After that, you pay for renewals yourself, sometimes without having checked if there are better or cheaper options available.

Understanding Bundled Bike Insurance for New Two-Wheelers

For new bikes, insurers offer bundled two wheeler insurance policies, which typically include:

• 5 years of third-party bike insurance cover
• 1 year of own-damage bike insurance cover

While this bundled structure is mandatory for new two-wheelers, you are free to buy it from any insurer, not necessarily the dealer.

What Is the Deal Between Motor Insurance Companies and Automobile Dealers?

Bike dealers often have tie-ups with in-house or external bike insurance companies. These insurers pay commissions to dealers for selling policies, which is why dealer-sold insurance is often more expensive and less transparent.

Additionally, buyers are frequently not informed about No Claim Bonus (NCB) transfer, which can be carried forward from an existing policy to a new bike, resulting in missed savings.

Dealer Bike Insurance Vs. Online Bike Insurance

The table below highlights the difference between buying bike insurance from a dealer and buying bike insurance online:

Risks of Buying Bike Insurance Only from Dealers

Opting for dealer insurance without comparison may lead to:

• Higher premium costs
• Limited add-on options
• Incorrect or low IDV selection
• Missed NCB benefits
• Dependence on dealers for claims and renewals

Points to Remember While Buying a New Two-Wheeler

As a respective two-wheeler buyer, you can avail insurance services from any insurer in the market. With that said, here is a list of pointers that you should keep in mind while you are planning to buy a new vehicle from a dealer:

• According to the Competition Act 2022, the CCI has declared that it is not compulsory to purchase insurance services from automobile dealers.
• As a potential buyer, you might look for cash discounts and opt for free bike insurance coverage offered by these bike dealerships. However, this is a myth, as it is not a free product; some hidden charges or higher premiums may be included.
• Before finalising the deal, you must explore the options in the market. You can start by doing an online comparison to avail yourself of the benefits of the bike insurance policy.
• For online bike insurance comparison, you can visit the website of Policybazaar Insurance Brokers Private Limited, where you can start by comparing the insurance plans offered by more than 20+ insurers in India.