The IRDAI has made it compulsory for two-wheelers to have third-party bike insurance coverage. However, there have been incidences when bike owners did not opt for bike insurance despite it being mandatory. To make this rule more stringent, the IRDAI requires all new bike owners to purchase a five-year insurance plan. However, a long-term third-party bike insurance plan only benefits you. You stay away from the hassle of renewing your plan every year, preventing to a great extent the incidences of lapsed policies and the loss of coverage one has to deal with in such scenarios. Let's read out the types of two-wheeler insurance policies one can buy in India before focusing solely on the five-year plan.
What are the Types of Two-wheeler Insurance Plans?
There are three types of two-wheeler insurance plans available in India:
Comprehensive Bike Insurance Policy
Comprehensive bike insurance plan protects you from third-party liability and covers your vehicle in case of theft, natural or man-made calamities, and damage caused due to accidents. You can have it customized with the various bike insurance add-ons offered.
Third-party Liability Bike Insurance Policy
Third-party bike insurance is mandatory according to the Motor Vehicles Act, 1988. As the name suggests, it provides coverage only to third-party liabilities such as injuries or accidental death of the third party or any damage caused to their property. Not having such a plan would lead to penalties. Additionally, you can’t customize a third-party bike insurance plan. However, you can add a personal accident bike insurance add-on cover to stay protected against injuries faced by you or the driver running your bike.
Standalone Own Damage Insurance Policy
Standalone own damage bike insurance policy covers damages occurring only to the insured's vehicle. These damages could result from accidents, natural or man-made calamities, theft, fire, etc. This plan, like a comprehensive two-wheeler insurance policy, allows you add-ons.
How Do Five-year Two-wheeler Insurance Plans Suit You?
This five-year policy coverage for bikes is almost similar to that of a short-term plan. You receive comprehensive policy coverage for one year and a third-party liability coverage plan for five years.
The significant difference here is in the duration of the vehicle policy and the plan's cost. Therefore, a long-term bike insurance option is much better than a short-term policy.
Computation of No-Claim Bonus (NCB) on a Five-Year Plan
The NCB in bike insurance is applicable only on the 'own damage' part of your insurance policy. As an added incentive for longer duration coverage opted by you, a higher NCB is provided on five-year plans compared to annual plans.
The table below will offer insight into the NCB computation for your bike insurance policy (5+1 years).
|Claims Registered ||Discount (%) on Own Damage Premium|
|0 claims during the entire policy term||30-35|
|1 claim during the first year, followed by 0 claims for the rest of the policy term||25|
|Only 1 claim during the second year and no other claims during the policy term||20|
|1 or more claims during the third year or multiple claims during the policy term||0|
You can also become eligible for incremental NCB, offered by some insurers, based on your bike insurance claims track record. The incremental benefit extended to you is illustrated below.
|Claims Filed||Incremental NCB Percentage|
|3 or more than 3||0%|
|2||20% of premium value|
|1||30% of premium value|
|0||40% of premium value|
Perks of Availing of a Five-year Two-wheeler Insurance Policy Coverage
A five-year bike insurance policy offers several benefits, which are as follows:
Insurance coverage is very important to ensure the security of your bike in terms of possible financial liabilities. If there is no policy or an inactive one, your bike will suffer damages, making you financially liable. Your insurer can protect you only if there is continuous insurance coverage.
Avoidance of Challans on Bike Insurance
Riding a bike without insurance is illegal in India, and you will be penalized through a challan. It is a receipt of a traffic-related violation. Having a long-term policy makes you free from such challans. That can be greatly ensured by having a long-term bike insurance policy.
Read more - 5 Reasons Why You Should Opt for Long-term Two-wheeler Insurance
Low Premium Charges
The short-term policy premium is always higher than that of a long-term policy. Therefore, long-term policies are reasonable.
Besides hassle-free riding, a long-term motorcycle insurance plan provides uninterrupted coverage. As per the Motor Vehicles Act, 1988, this insurance is mandatory for every two-wheeler. As we have seen above, you pay less for long-term plans.
However, they have their pros and cons, and the choice is yours to make. Moreover, there are benefits like additional NCB discounts if you fulfill the requirements. It also prevents the incidences of expired or lapsed policies to a great extent.
Read more - All You Need to Know About Multi-year Two-wheeler Insurance