Know the IRDAI Rules before you invest in a Two-wheeler Insurance

The Insurance Regulatory and Development Authority of India (IRDAI) lists all the rules and regulations regarding insurance in the Indian scenario. It was established in 2000 to ensure impartial, straightforward and orderly conduct.

For starters, the IRDAI rules for two-wheeler insurance policies are binding for both the insurer and the insured. The extensive list of rules includes a wide range of coverages, a plan’s inclusions and exclusions, and insurance renewal plans, among others. So, to avoid any unwanted complications, the insurer must follow all the rules and regulations when buying an insurance policy.  If you are considering buying two-wheeler insurance policy that meets IRDAI norms, you have come to the right place. 

Types of Two-wheeler Insurance Covers

Third-party Liability Insurance 

It is the most basic insurance policy that bike buyers usually prefer. The Motor Vehicles Act, 1988, clearly states that every two-wheeler owner must possess 3rd party bike insurance. Say you are riding the bike and unfortunately meet with an accident; this insurance covers any damages caused to the third party. Here, the third party could be a person, vehicle or property. 

However, make a note of the following points -  

• The policy does not cover your own damages.
• The court decides the compensation.
• In case of death or injury to a third party, the insurer will pay on your behalf.

Comprehensive Insurance 

As the name suggests, this policy offers broader coverage, including third-party liabilities. Unlike third-party liability insurance, Comprehensive bike insurance covers the damages caused to your own bike in the unlikely event of an accident.

Keep the following points in mind – 

• Natural calamities like floods, earthquakes, and landslides are covered.
• Man-made disasters like riots, vandalism, and terrorist activities are covered.
• The insurer pays for losses mentioned in the add-on benefits.
• In case of a total loss of the bike, the bike insurance company provides compensation. 

IRDAI New Rules for Two-wheeler Insurance (Released in 2020)

• Riding without third-party insurance will result in a penalty of INR 2,000 or imprisonment of three months for you. In some cases, both punishments can be awarded.
• If the new rules do not clearly state punishment for a bike rider’s offence, a challan of INR 500 for a first offence and INR 1,500 for a second offence is issued.
• INR 500 to INR 1,000 penalty for not following the road laws.
• INR 2,000 for non-cooperation with authority.
• INR 5,000 if found riding without a valid driver’s licence.
• INR 1,000 for exceeding the speed limit.
• INR 10,000 for riding a bike despite disqualification.
• Imprisonment for six months/ and an INR 1,000 fine for hazardous driving

Exclusions of a Two-wheeler Insurance Policy

Let’s find the two-wheeler insurance policy’s exclusions concerning accidental damages.

• Damages caused due to electrical or mechanical faults in the insured vehicle.
• Unable to procure official documents like a valid driving licence.
• Damage to bike tyres and tubes.
• Loss of accessories owing to burglary, unless the insured vehicle is stolen at the same time.
• Intentionally causing damage to the vehicle to make a false bike insurance claim.
• Damages that may occur outside the policy’s defined geographic area.
• Not paying attention to traffic and road regulations while riding.
• Riding while under the influence of drugs or alcohol leads to claim rejections.
• Damages that are a by-product of the regular wear and tear of vehicle components.
• Any claim arising from contractual liability.

IRDAI Rules for Two-wheeler Insurance Renewal

• Timely renewal is a must for seamless coverage.
• The insurer does not cover damages incurred after the policy’s expiry date, including accidental damages during the grace period.
• No-claim bonus (NCB) will become void on failure to renew the bike insurance within 90 days of the policy expiration date.

IRDAI Rules for Depreciation

When it comes to calculating the premium rates of two-wheeler insurance, depreciation matters to a great extent. Keeping in mind the best interest of the policy holder, the regulatory body has set forth some guidelines when deciding the depreciation. These are:

• Fibreglass components will bear a depreciation of 30%.
• Crucial components like batteries, tyres, tube parts, rubber, nylon and plastic components will have a depreciation value of 50%.
• Glass parts are not considered for depreciation.
• Metal parts depreciation are decided by the respective insurance provider.

Depending on the age of the vehicle, the IRDAI has allocated certain slabs for depreciation. 

Conclusion

All said and done, when you are considering buying a two-wheeler insurance policy, you must make it a point to go through the guidelines set forth by the IRDAI.  The authority has passed these rules and regulations so that you do not fall prey to an insurer’s fraudulent conduct or malpractice. That said, you should also check the details mentioned in the policy document.

Read more-

Basic IRDAI Guidelines for Two-wheeler Insurance in India

Checklist for Instant Two-wheeler Insurance