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Why Two-wheeler Owners Should Consider Multi-Year Insurance Plan

When you take home your new bike, it comes with another responsibility called ‘Two-wheeler Insurance’. While buying vehicle insurance online, the policyholder is advised to have memorised the renewal date on priority. Insurance and policy renewal go hand in hand and forgetting renewal dates are an alarming possibility. In a flurry of studying, meeting, workload, family, friend or countless other important events, the renewal date may slip from one’s thoughts. While driving without insurance is an offence in India, chances are that you have no idea how to deal with an invalid two-wheeler insurance plan.

Statistics Say

As per the estimation of General Insurance Council (GIC), 60% of motor vehicles running on the Indian roads are uninsured. While India had approximately 19 crore registered vehicles in the year 2015-16, only 8.26 crore were legally insured.

Strikingly, the ratio of uninsured two-wheelers- motorcycles and scooters, is higher. We guess that the reason for this sorry situation is the rigid process related to renewing a two wheeler insurance policy. The countless phases of policy inspection, the vehicle lying in the garage, getting repaired for days, the tedious paperwork; everyone tries to avoid these.

So, why not opt for multi-year two-wheeler insurance? Or are there any visible benefits for a two-wheeler insurance plan that demands a huge chunk of your income for a 3-year premium at one go?

Apart from the benefits of not worrying about having to pay the annual premium for at least 3 years, this plan has other advantages as well. One of them is, that one can avoid the annual hikes in the premium.

Objective of Multi-Year Two-wheeler Insurance

The motive is to encourage two-wheeler owners to renew their vehicles after 3 years, so that the ratio of lapsed policies can be minimised. Policyholders can avoid any monetary losses and perhaps remembering a date after 3-years can also be managed, we guess.

Again, there is no hard and fast rule to shell out the entire insurance premium in one go. The list is long that explains why such plans are preferable than a standalone one-year plan.

Salient Features of Multi-Year Insurance

Third-Party Liability Insurance: This insurance policy covers you against hospitalisation expenses incurred because of damages and losses caused to a third party, in the course of an accident where the insured is at fault.

Own-Damage Cover: Some insurers provide own-damage cover with a Third Party Liability insurance that covers your vehicle for own-damage, damage against theft, accidental damage, loss, damages arising out of man-made and natural calamities etc. 

Personal Accident Cover for owner/driver: In case of an accidental death or total disability, the owner/driver is compensated up to a pre-decided amount as per the norms of this cover.

Personal Accident Cover for co-passengers: By paying a higher premium, you can avail a cover for co-passengers as well and keep the co-passengers financially protected.

Avail Cashless Claims: Arranging funds for repairing the damages and waiting for the claim amount is a tedious task. That’s why some multi-year insurance policies allow you to make cashless claims at network garages. Make sure, you are aware of the network garages of your insurer.

Policy Can Be Issuable Online in No Time: Online insurance has made the process hassle-free and involves less-paperwork. Now issuing a policy and documentation work can be done easily online. The insured gets a single policy document for three-years.

Port Your Two-wheeler Policy Easily: After completing three-years with an insurer, you can easily port your policy to another insurer if you convinced you’re getting a better deal with the cover and premium offered by the competitor.

Why You Need Long-term Two-wheeler Insurance for Your Bike

Avoiding an Unnecessary Headache - Insuring your bike for three years in one go means there is no insurance related headaches in between- not at least regarding your two-wheeler insurance renewal.

You are packed with other important things such as filing income tax return, bike servicing, annual health check-up of your parents, child’s birthday, anniversary etc. Amidst of these skipping your insurance renewal date is no surprise, though it is equally important. Hence, why living with the fear of riding the vehicle without a valid insurance policy, when you just need to remember a date in three-years to renew it?

Save More - IRDA revises the premium of third party liability insurance every year or so. It indicates that regardless of you buy a third party insurance or comprehensive two-wheeler insurance, you may have to pay slightly a higher premium without grasp mentally.

With a multi-year insurance policy, you can lock your premium for a long time and can avoid the annual cost revision cycle. Moreover, insurance companies also attract the customers by offering an upfront discount at the time of buying a multi-year policy.

Best Way to Avoid Unnecessary Loss - Riding with an expired policy is an offence in India, even for a day also. You face hardship if god forbid meet with an accident and unable to make a claim due to the lapsed policy. Also, if traffic police catch you, you may have to pay bulky fines.

Moreover, you face snags during a vehicle inspection at the time of policy renewal. By owning a long-term insurance plan, you can drive with a policy that is valid for three years. So, no possibility of arising such situations and don’t need to carry renewed documents every year.

Don’t Need to Compromise on Your No Claim Bonus - No Claim Bonus is the most alluring element of an insurance policy, which is a bonus for the policyholder for every claim-free year. But the negative part is that it can fall to ZERO even if a single claim is made, irrespective of how many NCBs you have and this is a condition of every single-year insurance policy. But with a multi-year plan, you can save your NCB bonus. How? Well, unlike other plans, the NCB doesn’t go back to zero the moment a claim is made in a long-term plan.

Let’s learn about this with an example:

A owned a single-year policy while B owned a long-term policy. In the first year, they both earned 20% NCB for not claiming the insurance. This comes as a 20% discount on their year insurance premium. This is being counted for every claim-free consecutive year.

Here comes the twist...

In case both A and B have earned three NCB for not claiming the insurance, A would have earned 35% NCB discount while B may get 40% or more depending on the insurer, as it varies. After that, if both make a claim, A’s NCB will fall back to ZERO for the coming year.

But, B would definitely not lose the whole NCB but depending on the NCB structure of the company, B will leave with a certain amount of NCB.

Policy Cancellation is Simple - Buying long-term insurance policy doesn’t bind you to stick with it. Like a single-year policy, you can withdraw from this policy at any point in time, during the policy tenure. The insurer will refund the money for the unutilised time.  Nonetheless, you must ensure that you buy a new policy before surrendering the old one. In case you’ve earned NCB from the existing policy, don’t forget to collect the NCB retention certificate from the old insurer to avail your premium at a lower price from the new insurer.

On a Final Note

Considering the law released by Motor Vehicles Act, most of the vehicle owners want to insure their two-wheelers, but are unaware of how to choose a right plan. However, the current motor regulation doesn’t allow a multi-year plan for cars. As per the estimation made by Policybazaar.com, initially, two companies were offering multi-year two-wheeler insurance. Now the count has been extended up to six companies including HDFC Ergo, Bajaj Allianz, ICIC Lombard, New India Assurance. However, don’t forget to compare the plans before zeroing on one. There are aggregator websites where you can compare the insurance plans on parameters such as benefits offered, coverage, features, renewal process, claim settlement ratio etc. or browse over policybazaar bike insurance