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5 Fatal Mistakes to Avoid When Buying Two-wheeler Insurance

13 July 2022, 11:32 PM

A two-wheeler provides exceptional flexibility and is cost-efficient. Two-wheelers usually consume less fuel than cars and can be manoeuvred easily in heavy traffic. However, a two-wheeler comes with additional expenses, including insurance, registration fees, road tax, and PUC (Pollution Under Control).

Bike insurance consumes the lion's share of the additional expenses a two-wheeler owner incurs on buying a new or used two-wheeler. Purchasing an offline or online bike insurance policy may escalate the cost further if you make some avoidable mistakes. This article discusses the five fatal mistakes two-wheeler owners frequently make when buying a bike insurance policy. But before delving deeper, let's understand briefly what bike insurance is and the types of bike insurance policies you may purchase.

What is a Bike Insurance Policy and What are its Types?

A bike insurance plan is a purposeful insurance policy providing coverage against accidents involving the insured two-wheeler. While some bike insurance policies provide comprehensive coverage, others cover only the third party affected due to the accident.

According to the Motor Vehicles Act, 1988, purchasing two-wheeler third-party insurance is mandatory. Without two-wheeler insurance, no vehicles are allowed to ply on Indian roads. Moreover, if the police catch an uninsured two-wheeler, the owner must pay a fine of INR 2,000 and face imprisonment for three months. Subsequent breaches can take the fine count to up to INR 4,000.

You can buy these types of two-wheeler insurance policies in India. They are as follows:

Comprehensive Bike Insurance Policy

Comprehensive bike insurance policies cover policyholders for any damage their bikes cause to a third-party person, property, or vehicle. Furthermore, it pays for any damage caused to the insured bike because of the accident. The vehicle owner may also include some add-ons to extend the policy coverage.

Third-party Bike Insurance Policy

Third-party bike insurance policies provide protection from any damage the policyholder's bike causes to a third-party person, property or vehicle. It does not pay anything to the owner of the insured bike if an accident happens.

Standalone Own Damage Policy 

Standalone Own Damage two wheeler policy covers the policyholder and the vehicle against damage or loss due to an accident, theft, and natural or man-made disasters.

Personal Accident Cover 

The IRDAI or Insurance Regulatory and Development Authority of India has mandated that every two-wheeler owner in India must possess a valid personal accident cover of INR 15 lakh. This cover enables the insurer to pay up to INR 15 lakhs for the bike owner's death or permanent total disablement due to an accident involving the insured two-wheeler.

Now that you know about the basics of two-wheeler insurance, let's discover the five fatal mistakes you must avoid when purchasing an online or offline two-wheeler insurance policy.

Avoid These 5 Mistakes When Buying a Bike Insurance Policy

1. Not Transferring Insurance When Buying a Second-hand Bike

The Indian 'used two-wheeler' market is a booming one. People prefer buying used two-wheelers as they offer price-efficiency and quick possession. Since most documents, including insurance, PUC, road tax certificate, registration certificate, etc, are already available, the buyer does not have to burn the midnight oil to get these documents.

However, a majority of used two-wheeler buyers overlook the need to get the insurance transferred to them when buying this vehicle. In the lack of insurance ownership transfer, you cannot renew the policy; if you do not, your bike will stay uninsured. An uninsured vehicle cannot legally ply on Indian roads.

So, while buying a used two-wheeler, ensure the insurance gets transferred to your name. You may write an application and submit it to the insurer along with documents like the registration certificate and transfer papers, requesting them to change the insured's name. Alternatively, you may apply for a new bike insurance policy. 

2. Riding with an Expired or Lapsed Policy

According to the Indian Motor Vehicle laws, two-wheeler owners must have valid third-party insurance. However, bike owners often forget to renew their policies on expiry. It increases the risk of financial losses in the event of an accident and makes them legally liable to pay penalties and fines.

Two-wheeler insurance policies can be of two types - one-year and long-term. While a one-year policy provides coverage for one full year from the policy purchase or previous insurance expiry date, a long-term policy offers coverage for up to five years. A long-term bike insurance policy keeps you insured for an extended term, reducing the chances of riding uninsured two-wheelers.

3. Losing NCB Benefits

The no-claim bonus (NCB) is the insurer's way of saying 'Thank You' for not claiming the insurance amount. At the end of every policy period, the insurer increases the NCB amount to reward you for not submitting the claim form. The NCB is expressed in percentage and typically ranges between 20% and 50%. The NCB amount gets deducted from your total premium, thereby reducing the premium amount.

However, if you do not renew your policy even within 90 days of the expiration date, the policy lapses and so does the accumulated NCB. So, when you eventually renew the bike insurance policy online or offline, the insurer will charge a higher amount from you. Hence, it is imperative to renew your policy on or before the last date of your two-wheeler insurance policy to get an affordable rate.

4. Choosing a Lower IDV

IDV, the abbreviated form of the insured declared value, is a crucial figure in two-wheeler insurance. The IDV of two-wheeler is basically the amount the insurer agrees to pay you in the event of vehicle theft or damage due to war, flood, earthquake, lightning, or any terrorist activity. So, this applies to comprehensive and standalone two-wheeler insurance policies. The IDV reduces as your vehicle gets older. Since the IDV impacts the premium amount; the higher the IDV, the greater the premium and vice-versa, many go for a lower IDV only to feel hard done by when claiming. The actual expenses incurred on bike repairs or loss could be way more than the chosen IDV. So, opt for a higher IDV without losing focus on the premium payable. Compare comprehensive policies based on IDV and premium and figure out the one with the best combo.

5. Delay in Claiming the Insurance Amount

Indian insurers generally prefer if you report an accident or collision within 48 hours of the event. However, if a policyholder delays when reporting the accident or filing the bike insurance claim, the insurer may reject your case. So, if you want money for any damage to yourself or your bike, you must report the accident immediately to the insurer.

The EndNote

These are the top five mistakes two-wheeler owners commonly make in India. The mistakes contained in the article can make you financially vulnerable and a legal offender. Ensure you avoid such mistakes for your good.

Visit Paytm Insurance to check the best online two-wheeler insurance policies and pick the one that suits you.

Also read - 


1. What is the fine for riding a two-wheeler without insurance?

The fine for riding an uninsured two-wheeler can extend up to INR 4,000 and imprisonment for three months for breaches more than once. 

2. How can I get the insurance policy transferred when purchasing a second-hand motorcycle?

To get the insurance policy transferred from the seller, you need to write and submit an application form to the insurer. Ensure to attach documents like the registration certificate (RC), transfer papers, and the application form.  

3. What is the maximum term of a bike insurance policy?

The maximum term of a bike insurance policy can be five years. 

4. Shall I choose a lower IDV for my two-wheeler?

The IDV of a vehicle refers to its present worth after deducting depreciation. As the bike gets older, the IDV reduces proportionately. Choosing a lower IDV might reduce your premium but may prove inadequate in case of a claim. Make sure the IDV is reasonably high without stretching the premium beyond your reach.

5. What is the maximum time limit for registering an accident claim?

Insurers generally entertain bike insurance claim requests if submitted within 48 hours of the accident or collision.

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