Is it Mandatory to Buy a 5-year Bike Insurance?

If you want to ride your two-wheeler vehicle on Indian roads, you must have a bike insurance policy. While the Motor Vehicles Act of 1988 mandates a third-party liability insurance coverage, bike owners have the choice to buy a comprehensive or package policy that covers own damage as well as third-party liability. While these policies must be renewed annually, bike owners also have the option to buy a policy for a longer terms like 3 or 5 years. Of course, the premium may vary. 

There is a lot of buzz around a 5-year bike insurance. Most importantly, whether a 5-year bike insurance is mandatory or not? Is it mandatory only for new bikes or old bikes as well? How does it affect the premium and policy coverage? Find out the answers here. 

What are the types of bike insurance available? 

1. There are 3 types of insurance coverage available for bike owners in India – third-party liability, comprehensive, and own damage. Third-party cover is mandatory for vehicle owners as per the Motor Vehicles Act in India. It covers your liability when your vehicle hits others or damages their properties. It is a bike insurance policy that offers basic coverage. 
2. Comprehensive policy covers third-party liability along with coverage for damages to your own vehicle because of accidents, fire, disasters, and theft. 
3. Own damage bike insurance does not include third-party coverage. An owner can buy such a policy separately, along with mandatory third-party bike insurance. 

What is 5-year bike insurance? Is it mandatory to have? 

 A third-party liability coverage is anyway mandatory for all two-wheelers in India, as per the Motor Vehicles Act of 1988. Following the Supreme Court of India ruling of September 2018, IRDAI (Insurance Regulatory and Development Authority of India) also made it mandatory to offer third-party liability coverage for 5 years for all new two-wheelers at a one-time premium payment.

It means the bike owners purchasing such a policy will not be required to renew their third-party policy every year. Only the own damage policy must be renewed annually. It’s important to note that a 5-year cover is mandatory only for third-party (TP) liability bike insurance policies. If you choose to buy a comprehensive or package two-wheeler insurance for your new bike, then your policy tenure will be maximum 3 years. 

What does a 5-year bike insurance policy cover? 

1. You get liability coverage for bodily injuries and accidental damages to the properties of others caused by your vehicle.
2. Accidental damages to your vehicle because of collision, natural disasters, man-made disasters, fire and theft  

Benefits of a 5-year bike insurance policy

Significant advantages of purchasing a 5-year motorcycle insurance policy are: 

1. It removes the hassles of renewing third-party insurance every year. As this is a statutory requirement for bike owners, failure to renew can attract hefty fines. 
2. It saves money on premiums. Long-term policies are always cheaper compared to annual renewal policies. 
3. Disruption-free long-term protection. An owner does not need to worry about losing the insurance coverage. 

Policyholders can avail of a no-claim bonus only if they purchase a comprehensive policy. Policy owners get NCB in bike insurance during renewal for a zero-claim policy year. A 3-year comprehensive motorcycle insurance policy offers NCB on own damage cover. 

5 tips on how to choose a bike insurance policy

Any motorcycle owner must consider a few factors when buying a bike insurance policy:

1. Type of Coverage

It is important to enquire what type of insurance coverage a policy offers. Does it offer only statutory third-party liability coverage? Or does it come with a comprehensive coverage? Depending on the coverage, policy premiums may vary significantly. The benefits of own damage coverage are often necessary for owners of modern expensive bikes.

2. IDV (Insured Declared Value)

IDV is the value of the motorcycle that an owner declares while buying an insurance policy. The amount you can claim and the reimbursement you get is actually based on the IDV. Besides, insurers also deduct depreciation from the cost of damaged parts.

3. No-Claim Bonus (NCB)

Third-party coverage does not come with the benefits of a no-claim bonus. Only the own damage part of a comprehensive policy gets NCB in bike insurance. Enquiring and clearly learning about a no-claim bonus for a claim-free policy year is essential. Based on this NCB, you can decide whether to claim an expense.

4. Insurer’s Reputation

Post-sales customer service, ease of making claims, and claim settlement procedures make or mar the insurer's reputation. Every bike owner must check if an insurer has a reliable track record of efficient claim settlement. Reading customer reviews and ratings online for such information can be helpful.

5. Premium Cost

Finally, insurance is an essential cost for every bike owner. However, choosing competitively priced insurance policies can reduce the burden significantly. It is important to remember that a policy with low premiums may not help in case of an accident or similar distress. So, consider all aspects of bike insurance before deciding on which policy to purchase.

Conclusion

People purchase motorcycles for various reasons, from everyday practical use to satisfying necessities as well as aspirational values. Whatever the reason, it deserves the protection of a right bike insurance policy. Research thoroughly before you choose an insurance policy for your valuable bike.