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The IRDAI Rules for Two-wheeler Insurance Policies

By Vikas Chandra Das
22 July 2022, 11:54 AM

When you buy a bike in India, your spending is not limited to the cost of the vehicle but also other expenses– one of which is the money bikers spend to buy two-wheeler insurance. Do you know that 3rd party bike insurance is legally compliant in India?

But more than just compliance, two-wheeler insurance offers bikers a shield against expenses arising from damage to the motorcycle during an accident or loss of the bike by theft or damage to a third party from your motorcycle in an accident. In this post, you will find all the information you need about IRDAI rules concerning bike insurance policies to help you make the right decision.

What is the Insurance Regulatory and Development Authority of India (IRDAI)?

The IRDAI scrutinizes life and general insurance companies to safeguard policyholders' interests as it standardizes national governance and insurance business regulations. It works to encourage more people to spend on insurance by ensuring excellent protective policies through insurers.

The insurance industry is divided into two categories: life and non-life. It oversees the regulations that safeguard the safety of your life, and general insurance includes health, car, house, and two-wheeler insurance.

IRDAI Rules for Two-wheelers

The two-fold aim of IRDAI is to address and educate the existing and prospective insurances buyer on various issues concerning insurance coverage. Bikers can find all the information they need about two-wheeler insurance in the IRDAI directive.

Third-party Bike Insurance (TPI)

The Motor Vehicles Act, 1988, and the IRDAI rules make third-party bike insurance compulsory in India. It covers the bike owners from damages to third parties and their properties during an accident involving the insured bike. 

IRDAI issues complete guidelines to direct bike owners about 

  • The coverage length of bike insurance.
  • Terms and conditions of third-party bike insurance.
  • And the inclusion and exclusion of the 3rd party insurance policy.

Here is How third-party Bike Insurance Protects Bike Owners:

Suppose a biker backs up or collides with another vehicle or third-party property. The IRDAI guideline covers the biker as follows:

  • The third-party bike insurance policy will cover only third-party liability arising from injury or death of the other biker or damage from the insured bike to third-party property.
  • The court will determine the compensation to the third party. However, it does not cover the liability for damage to the insured bike or rider.
  • If the bike owner with third-party bike insurance dies or is severely wounded in the accident, the insurance provider will still pay damages on the biker's behalf.

For instance, if the insured bike injures a passerby, TPI will cover his medical expenses but will not cover the insured's medical bills, nor will the bike insurance policy cover the damage to the bike.

Comprehensive Bike Insurance Policy

As per the IRDAI guidelines, a comprehensive bike policy must have all the features of the third-party bike insurance and must include the following requirements:

  • The insurer will cover all damages to an insured bike due to natural or artificial disasters.
  • Bikers can buy add-on covers and get protected against stuff not covered under a standard bike insurance policy.
  • Suppose the bike is damaged beyond repair or is stolen; their insurance company will pay the biker the required compensation.

Read more - A Mini Guide to Two Wheeler Insurance

 IDRAI's New Two-wheeler Insurance Rules

  • The IRDAI has extended the tenure of the third-party bike insurance to five years for all bikes bought after September 1st, 2018. And this is mandatory compliance for all two-wheelers in India.
  • The minimum limit of the mandatory personal accident cover is also raised to INR 15 Lakhs; previously, it was INR1Lakh.
  • Bikers can now buy third-party bike insurance as a standalone policy but will have to buy second third-party bike insurance when they buy another bike.
  • Although IRDAI does not list out the non-compliance or offence list, it indicates that the penalty for the biker's first offence is INR 500, and for every subsequent offence, it will be INR 1500.
  • For non-cooperation with traffic rules and traffic authority, the biker will have to pay a fine of INR 2000.
  • Suppose the rider is caught riding on the Indian roads without a valid license; he will be liable to pay a fine of INR 5000.
  • Following a disqualification, the rider will have to pay a fine of INR 10,000
  • If the biker rides his bike above the prescribed speed limit and is caught doing so, he will be fined INR 1000.
  • For rash and rough riding, the biker will have to pay a fine of INR 1000 and may be imprisoned for months.

IRDAI's Personal Accident Cover Rules

Bike owners can include a personal accident cover as an add-on to their third-party or comprehensive bike insurance. It covers the bike owner for all expenses resulting from injury or death to themselves in a road accident. The IRDAI guidelines concerning PA cover are as follows:

  • Suppose the accident leaves the biker with a total disability or results in his death; his kin will receive a compensation of INR 15 lakh from the insurer.
  • Check the table below to know the exact compensation limits.
CoverageCompensation
Death100% of the sum insured as compensation. 
If both limbs or both eyes or one eye and one limb are lost in the accident100% of the sum insured as compensation. 
If only one eye or one limb is lost in the accident50% of the sum insured is paid as compensation

Conclusion 

Getting the best insurance cover is essential to rule out substantial financial losses when your bike meets with an accident. Knowing the IRDAI guidelines helps bike owners get more value from their bike insurance policy. 

Read more - A Complete Guide to a Two-wheeler Insurance Policy

FAQs

1. What is compulsory deductible as per the IRDAI?

Compulsory deductible refers to the portion the insurer won't cover. The premium amount reduces with the deductible.


 

2. Am I eligible for a premium discount on bike insurance as per the IRDAI norms?

Yes, you can! You can get a discount during no-claim years and when installing an anti-theft device on your bike. Even becoming a member of an automobile association can fetch you premium discounts.


 

3. What is IRDAI and what are its functions?

IRDAI is the highest insurance authority in India, and it governs and regulates the insurance business throughout the country and safeguards the insured's interests.


 

4. Does the IRDAI allow the cancellation of bike Insurance?

As per IRDAI rules, one can cancel the bike insurance in various instances. For example, if you sell a bike, you can go on to cancel your insurance policy. The insurer can reject your cancellation request only when the reason is not valid.


 

5. What are the IRDAI rules to follow related to the expiry of bike insurance?

Do the bike insurance renewal before it expires, and if you fail to do so within 90 days of expiry, you may lose your no-claim bonus, and you may have to go through the bike inspection costs, which will cost you.

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