Is Bike Insurance Mandatory for 5 Years?

What is a 5-Year Bike Insurance Policy?

A 5-year bike insurance policy is a long-term two wheeler insurance plan that provides:

• 5-year Third-Party Liability Cover (mandatory)
• 1-year Own Damage (OD) cover (optional, if bundled as a comprehensive bike insurance policy)

This mandate applies to all new bikes and scooters purchased on or after August 1, 2020.

Why is 5-Year Bike Insurance Mandatory? (IRDAI Rule)

The primary aim of IRDAI's rule is to:

• Reduce uninsured vehicles on the road.
• Ensure long-term liability protection.
• Minimise two wheeler insurance lapse cases.
• Improve road safety compliance.

Significance of a 5-year Bike Insurance Policy

When you buy a new two-wheeler, it is mandatory to get a 5-year bike insurance policy, which includes a 5-year third-party plan and a 1-year own-damage cover, which is totally optional. Considering the rise in the number of accidents involving two-wheelers, IRDAI made it effective from August 1, 2020.

The primary objective of this initiative was to ensure that more numbers of two-wheelers are insured to lower the number of lapsed or expired bike insurance policies. This addresses the issue of period of liability cover in two wheeler insurance, ensuring a minimum level of financial protection is in place.

Remember that a 5-year bike insurance cover is mandated only for third-party bike insurance. If you have bought a brand-new bike or scooter, it will be compulsory for you to opt for a 5-year third-party liability insurance cover. However, if you plan to buy comprehensive bike insurance for your new vehicle, the policy tenure will be 3 years instead of 5 years.

How Does a 5-year Bike Insurance Policy Work?

The 5-year bike insurance policy is similar to any other long-term motor insurance policy. In this, you get third-party liability coverage for 5 years and own-damage coverage for 1 year.

The policy structure typically includes:

Benefits of a 5-year Bike Insurance Policy

The Insurance Regulatory Development Authority of India (IRDA) has given the green signal to 5-year motor insurance policies. Over the past few years, several general insurance companies have introduced this policy to the public, which has helped them further address the problem of non-renewal.

The following are the benefits of buying a five-year two-wheeler insurance plan:

1. You can save more

   The annual bike insurance premium of a long-term policy is always lower than that of a short-term policy. As a result, you get to pay a lower premium for your 5-year third-party bike insurance policy along with 1-year OD cover. This helps keep the 5-year bike insurance price and the overall bike insurance price lower.

2. No worries for annual policy renewal

   Since your two wheeler insurance is valid for 5 years, you do not have to worry about remembering the annual renewal dates. Furthermore, it reduces the risk of being caught by the police for carrying lapsed or inactive bike insurance. In simpler terms, a long-term bike insurance policy is a great deal that provides assurance on all aspects, including annual renewal, financial protection, and third-party liability coverage.

3. No Claim Bonus

   A No Claim Bonus or NCB is a discount that you get on your own-damage premium renewal for not making a single claim during the policy period. Hence, you earn a benefit during policy renewal for the next year's premium for every claim-free year.

   The simple rule for an annual bike insurance policy is that you will lose the accumulated NCB totally if you make a single claim during the policy period. However, in the case of a 5-year policy or a long-term bike insurance policy, your NCB does not become nil and void. The NCB discount reduces to the previous year's percentage slab, and ultimately, you still receive the benefit of a bike insurance no claim bonus.

4. Continuous protection

   When purchasing a two wheeler insurance policy, it is essential to find a plan that offers comprehensive and continuous protection to the bike against damage and losses. Your insurer cannot promise continuous coverage unless you have a 5-year bike insurance policy.

What is Covered Under a 5-Year Bike Insurance Policy?

Here are the inclusions of a 5-year bike insurance policy:

Third-Party Liability Cover

• Damage to third-party property
• Injury or death of a third person
• Legal liabilities

Own-Damage Cover (If opted)

• Accidental damage
• Fire and explosion
• Natural calamities
• Man-made disasters
• Theft
• Total loss

Bike Insurance Add-ons (Optional)

• Zero Depreciation Cover
• NCB Protection Cover
• Return to Invoice Cover
• Engine Protection Cover
• Roadside Assistance Cover

What is Not Covered in a 5-year Bike Insurance Policy?

Here are the exclusions of a 5-year bike insurance policy:

• Riding without a valid licence
• Drunk driving
• Mechanical/electrical breakdown
• Regular wear and tear
• Using the bike for racing or commercial purposes
• Invalid/expired policy at the time of the accident

How is Bike Insurance Premium Calculated for a 5-Year Policy?

• The third-party bike insurance premium is fixed by the IRDAI, which remains the same for all insurers.
• The OD premium varies, as it is based on bike model, location, engine CC, and various other factors.
• The bike insurance add-on is optional and depends on your needs.

5 Things to Keep in Mind Before Opting for a Bike Insurance Policy

Before making the payment for your bike insurance policy, make sure you look at these points:

1. Know your requirements

   Before buying bike insurance, you have to gauge your requirements. You can start by knowing the engine capacity of your bike, its age, the usability of your bike, your location, and other relevant details. All these factors help you in deciding the right insurance coverage for you.

2. Know your driving habits

   Knowing your driving habits will help you analyse your risk profile. For high-risk drivers, it is recommended to opt for an add-on coverage, such as NCB protection. It will not affect the accumulated bonus even if the person has raised a bike insurance claim. Note that you can only buy any type of add-on cover when you have a comprehensive bike insurance policy.

3. Find everything within your budget

   Do you know that comprehensive bike insurance is customizable? Yes, when you opt for a comprehensive policy, you can easily select the IDV (Insured Declared Value) of the bike. This will help you find the perfect plan for your budget. However, you must choose an ideal IDV to receive the correct payout amount in cases of theft or total loss of the insured bike.

4. Deductibles

   In the insurance industry, there are two types of deductibles- compulsory and voluntary. You can increase your voluntary deductibles to decrease the bike insurance premium. By doing so, you will have to pay a part of the claim amount from your own pocket in case of damage caused to your insured bike.

5. Buy bike insurance online

   Similar to any other commodity, you can also buy bike insurance online. On the internet, you will get insurance quotes from low to high-priced. Additionally, you enjoy convenience as you can buy it from the comfort of your own home. Furthermore, you don't have to pay for an agent's commission to buy the desired coverage, which you have to pay when you buy a policy offline. Therefore, the buying process is transparent, time-saving, and economical.

6. Compare bike insurance plans

   Buying bike insurance online is not enough to get the best deal. You have to compare several insurance plans before making the purchase. For this, you can visit the official website of Policybazaar Insurance Brokers Private Limited.

   Here you will find multiple plans offered by 17+ insurers. Moreover, you will get an idea about the kind of coverage that has been made for you and at what cost. It is advisable to compare bike insurance plans based on their benefits, inclusions & exclusions, additional cover availability, plan prices, and other relevant factors.

Common Misconceptions About 5-Year Bike Insurance

• Comprehensive cover is mandatory for 5 years.
  No. Only third-party insurance is mandatory for a period of 5 years.
• You cannot change insurer for 5 years.
  You can switch insurers by porting your OD cover every year.
• Long-term policies are more expensive.
  Actually, the annual premium cost is lower with long-term policies.

FAQs - Is 5-Year Bike Insurance Mandatory in India?