Before buying a bike, you consider the look, engine power, fuel efficiency and even accessories. But is it the same while buying bike insurance Policy? Do you invest as much time while choosing your insurer provider? After all, bike insurance is the only thing that protects you and your bike, in the case of emergencies.
With different insurance providers offering different plans for the same bike, it is normal to be confused. However, making the wrong choice may lead to problems later on. To make sure you get the best bike insurance for your vehicle, here are some things you need to consider before buying-
Things to Consider Before Buying Bike Insurance
1. Type of Coverage
There are two types of bike insurance policies available - Third Party Liability and Comprehensive Cover.
Third-party Liability Two Wheeler Insurance policy is mandatory as per law. Its policy cover is designed to provide financial protection for third parties. Therefore, only damages or losses suffered by a third party person or their property is covered under this policy. The price for Third-Party Liability Cover is set and standardized by the Insurance Regulatory And Development Authority Of India (IRDAI).
Although a Comprehensive Insurance policy is not mandatory, it is the most preferred cover for bike owners. It covers Third-party Liability Insurance, Own Damage, as well as unforeseen risks such as theft, accidents, natural calamities, etc.
Third-party liability cover is cheaper than Comprehensive one. But the coverage and benefits of Comprehensive Cover are worth the extra amount. It is easy to get distracted by the price and choose the cheapest plan. However, at the time of choosing, look for a policy that can be useful in all kinds of emergencies. Because that is what the premium is for.
PRO-TIP: You can opt for only Third-party Liability Insurance or choose Comprehensive Insurance. However, while buying bike insurance, your main focus should be on the coverage offered against the premium amount.
2. Premium Amount
Premium amount refers to the amount you need to pay the insurers to avail benefits of the insurance plan. Depending on the type of coverage you choose, the premium amount will also be different. It depends on a number of factors. The primary factor affecting the premium amount is the Cubic Capacity (CC) of your bike’s engine. Moreover, there are Secondary factors like the make, model and variant, RTO location, and age of your bike.
3. Insured Declared Value
Insured Declared Value is equivalent to the market value of the bike, at the time of its purchase. Simply put, Insurance Declared Value is equivalent to the fixed maximum sum insured at the time of buying the policy. It is the amount to be paid by the insurer, in case of loss or theft of your bike. IDV decreases as the age of the vehicle increases. This has a direct effect on the premium amount for your bike.
PRO-TIP: Choose a plan that offers the highest IDV for your bike. This will help you gain maximum benefits over a long period of time.
4. Multi-year Policy Term
Most two-wheeler insurance plans are designed for one year. Therefore, they need to be renewed annually. Moreover, IRDA increases the third-party liability portion of the premium by about 20% each year. To avoid this, bike owners can opt for a multi-year two-wheeler insurance policy. This unique policy has a policy term of a maximum of three years. This means you don't have to renew each year. A single one-time payment ensures your bike is covered for 2 or 3 years, depending on the plan.
PRO-TIP: You can save 20–40% upfront on your premium amount by choosing a multi-year policy.
5. Add-on Covers
Add-ons help to improve the scope of coverage for your bike’s protection. You are opting for an Add-on Cover based on your needs. It can easily be added to your existing policy. Make it a point to compare the add-ons offered by different insurers. Some of the most popular add-ons available for bikes are Zero Depreciation cover, Personal Accident Cover (PAC) for pillion riders, Engine Protection Cover, etc.
6. No-claim Bonus or NCB
No Claim Bonus (NCB) is a percentage discount offered on Own Damage (OD) premium to owners with no history of any claims during the policy term. This means that for each claim-free year, your insurance provider offers you a discount for being a safe rider. For example, if your premium amount is INR 2,000 annually. If you have not filed for any claim in the past year, you will be eligible for a 25% No-Claim Bonus (NCB) at the time of renewal. So, the new premium amount will be INR 1500. NCB is cumulative in nature and can be transferred from one insurance provider to the other.
PRO-TIP: No-Claim Bonus (NCB) is cumulative in nature and can be transferred from one insurance provider to the other.
7. Voluntary Deductible
Voluntary deductible is when you contribute for a portion of the damage, in case of an accident from your own pocket. Even though the entire cost of damage is to be borne by your insurer. Since you have volunteered to pay upfront, your premium amount is reduced. In the event of an accident, the amount equivalent to your voluntary deductible will be reduced from your claim amount.
8. Incurred Claim Ratio
Incurred Claim Ratio is the ratio of claims paid out against the total amount of premiums received during a particular financial period. For example, if an insurance provider has approved INR 80 Crores of claims out of the total INR 100 Crore of the premium amount received, the Incurred Claim Ratio will be 80%. Incurred Claim Ratio gives you a fair idea about the ability of an insurer to make payments, in the case of claims.
PRO-TIP: Insurers with Incurred Claim Ratio between 75% - 90% are ideal.
Additional Points To Consider While Buying Bike Insurance:
All insurers have a list of garages where you can avail cashless services. Having a large network of garages guarantees that you will find a garage or mechanic at the time of need. Check for the benefits and services offered by these network garages before buying.
Claims process & services:
Before buying, understand the process of filing for a claim. Most insurers have moved their claim settlement process online. This means you can file for a claim easily by sharing a video or even images. Some insurers even have an app to help you report an emergency immediately.
Insurer’s Market Value:
Before finalizing your Bike insurance provider, make sure you research well, compare quotes, and read the reviews and testimonials shared by other customers online. You can even check social media accounts of your insurance provider to understand their market value.
Premium Benefits or Services:
Due to competition in the market, most insurance providers offer premium services like 24*7 customer support, smartphone assisted self-inspection, paperless claims process, etc. Keep these additional features in mind while making the buying decision.
Before buying your bike’s insurance, understand the inclusions and exclusions of your two-wheeler policy. Avoid settling for the cheapest plan available in the market. If needed, you can consult the online customer support agents to help you understand complex jargon and benefits. Also, compare the quotes offered by different insurers. This will help you make an informed decision.