The Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous body that regulates and sets the rules regarding Indian insurance. It is responsible for ensuring that insurance companies follow fair, orderly, and ethical practices and that the best interests of the stakeholders are taken care of.
The IRDAI brings out policy updates that help improve the quality and reach of insurance in India. Many uninsured vehicles in India are two-wheelers. As per the Insurance Information Bureau (IIB) data released in 2020, two-wheelers occupy a major share of 60% of uninsured vehicles in India. So. the IRDAI rules regarding two-wheeler insurance policies are important. These rules are regarding policies, renewal, vehicle depreciation, etc.
Let us look at the IRDAI guidelines that impact the decision-making of two-wheeler insurance holders.
IRDAI Rules for a Third-party Two-wheeler Insurance Policy
As per the IRDAI, third-party liability insurance is the basic requirement to drive a bike on the road. This policy protects the policyholder from any third-party damages during an accident. The regulations for third-party bike insurance include:
- Compensation to the third party for any damage or injury in an accident involving the insured vehicle.
- The compensation amount will be determined based on the severity of the damage. In the case of demise, the deceased's net worth determines the compensation amount.
- The insurer has to compensate for any damage to a third party's property caused due to the insured vehicle.
- For third-party bike insurance, the basic premium can be INR 2,901 for a bike with a 75cc engine displacement for up to 5 years. For bike displacement of 75-150 cc, the premium is INR 3,851 and INR 15,117 for displacement greater than 350cc.
IRDAI Regulations for a Comprehensive Two-wheeler Insurance Policy
As per the IRDAI guidelines, a comprehensive two-wheeler insurance policy covers the insured under circumstances such as:
- Damage to the vehicle or rider in case of an accident.
- Any third-party liability arising from the accident, including injury, death, or damage to the property or vehicle.
- Loss due to natural calamities like fire, lightning, explosion, earthquake, storm, flood, hurricane, etc.
- Loss or damage to the insured vehicle due to man-made disasters like burglary, riot, theft, strike, accident, etc.
- Personal accident cover up to INR 15 lakh.
- Damage to the vehicle due to regular wear and tear, age-related damage, mechanical failure, or other consequential loss.
- Theft or loss of two-wheeler accessories without any damage to the insured vehicle.
- The insurer will not move ahead with any bike insurance claim if the rider (the insured or another rider) does not have a valid driver's license or is found to be under the influence of alcohol or any other substance.
- Damage to the vehicle or any other incident that takes place outside the geographical location mentioned in the policy
- Damage to bike tyres and tubes is not covered.
IRDAI Rules for Accident Cover
IRDAI rules mandate bike owners to have a personal accident cover. It covers the rider for a sum assured of INR 15 lakh, and compensation will be based on the type of loss. It includes:
|Loss of limbs, loss of eyesight (in both eyes)||100%|
|Accident leads to disability of the policyholder||100%|
|Loss of one eye or one limb||50%|
IRDAI Rules for Two-wheeler Insurance Renewal
IRDAI rules also apply to two-wheeler insurance renewal. Policyholders must ensure they abide by these and do not miss out on any benefits. The insurance renewal regulations include:
- For seamless coverage, the policyholder has to renew the policy on time.
- The insurer will not be liable for any cover or damages that incur after the bike insurance policy has expired. These include any accidents or other damages that may occur in the grace period.
- If two-wheeler insurance is not renewed even within the grace period of 90 days, all accumulated no-claim bonus (NCB) will be void.
IRDAI Regulations for Vehicle Depreciation
IRDAI also plays a crucial role in determining the two-wheeler insurance premium and coverage you'll get depending on your bike's health. The specific slabs for depreciation according to the age of the vehicle are as follows:
|Number of Years||% of Depreciation|
|Not exceeding 6 months||NIL|
|Exceeding 6 months to a year||5%|
|Exceeding a year to up to 2 years||10%|
|Exceeding 2 years but up to 3 years||15%|
|Exceeding 3 years but up to 4 years||25%|
|Exceeding 4 years but up to 5 years||35%|
|Exceeding 5 years but up to 10 years||40%|
|Exceeding 10 years||50%|
In addition to these slabs, vehicle parts also have specific depreciation rates. As per rules:
- There is a 30% depreciation for fibreglass components
- Depreciations at 50% for nylon, rubber, plastic, and other components like batteries, tires, and tube parts
- No depreciation on glass parts while metal parts are depreciated as per provisions of your two-wheeler insurance policy
In a Nutshell
If you have recently purchased two-wheeler insurance or plan to buy two-wheeler insurance online, you need to know the IRDAI rules and policies that apply to the same. Knowing these rules helps you select an apt plan for your needs and lets you get all the benefits from your provider.
While these standard rules apply to all two-wheeler insurance policies in India, many insurance providers also have clauses and additional provisions that you should know when buying any insurance. So, read the fine print and compare bike insurance policies from multiple providers to get the best option for your requirements.
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