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Two-wheeler Insurance Background Checks in India - A Complete Guide

By Juhi Walia
25 July 2022, 12:41 PM

Getting a third-party insurance policy is a great way to ensure that you comply with the regulation imposed by the Indian government and are protected against any third-party obligations induced due to an accident. The premium you pay for your insurance coverage depends on several factors, including your two-wheeler and your background.

As the insurance company takes the risk on your behalf and is vulnerable to incidents of fraud and cheating, it verifies the details you provide and learn about you and the vehicle before providing coverage. A part of this involves background checks on the vehicle owner from time to time.

In this post, we try to understand why and how bike insurance policy background checks are done in India.

What is a Two-wheeler Insurance Background Check?

It is essentially a process used by insurance companies to get useful information about the person they are offering the two-wheeler coverage. A thorough background check helps insurers know who they are servicing. It helps insurers avoid getting cheated and duped, helping them better serve worthy clients. Background checks are done for all bike insurance policies purchased online or offline.

Why are Two-wheeler Insurance Background Checks Done?

Here are some top reasons insurers perform a background check on vehicle owners taking insurance coverage.

To Avoid Identity Theft

The first reason to do an insurance background check is to verify the policyholder's identity. It helps them confirm that the person taking the insurance is the same portrayed by the documents and that they are selling the coverage to a genuine buyer. A background check also helps rule out any incidents of identity theft where somebody is trying to steal a vehicle owner’s identity and raising a fake claim to get money.

To Avoid Incorrect Information Submission

Insurance companies operate as per the details you fill in in the forms. Sometimes, people accidentally fill in wrong or misleading information about themselves or their vehicles. A background check helps the insurer verify that the details provided by the buyer are correct.

To Comply with Regulations

The IRDAI  or Insurance Regulator and Development Authority of India has made it mandatory for insurance companies to comply with anti-money laundering and KYC regulations. Conducting background checks helps them follow these guidelines and adhere to the legal requirements.

To Ascertain the Authencity of Claims

When a policyholder gets involved in an accident with a third party, the latter can raise a claim against the policy. As the company has no information about the third party, it must undertake a complete background check to verify that the claim is genuine.

To Offer Custom Products

Today, insurance companies consider customising two-wheeler coverage plans to suit the needs of individuals. They collect information about the vehicle owner to do this better. Custom products help avail of extra benefits and reduce the cost of the coverage. Thus, a background check helps provide a more appealing bike insurance policy.

To Decide on the Premium

Insurance providers perform background checks to ensure that the insurance premium is fixed based on the person’s driving habits. These companies don’t charge the same premium for people filing claims regularly and those who make occasional claims. A background check helps prevents any such situation.

How are Two-wheeler Insurance Background Checks Done?

Insurance companies require accurate information about the vehicle owner and bike details. Here are a few things the insurer looks for during background checks.

Personal Information

Bike insurance companies use the personal details of the person willing to buy a policy to verify their identity. Such a background check is done to comply with the KYC guidelines. Information about the policyholder is also verified when a claim is filed. It helps the insurer detect any identity theft and avoid fraud.

Driving History

An important aspect insurance companies evaluate before giving two-wheeler insurance is the person's driving history. They do this by assessing their history in terms of driving skills and checking whether they were involved in any accidents in the past.

Past Offences

The insurance company also wants to ensure that the individual buying or filing a bike insurance claim has not committed fraud. Like any other financial institution, insurance companies are vulnerable to scammers. Background checks help insurers reduce their risk of getting exposed to fraud. By checking the individual’s criminal history, they can make sure they are not giving coverage to somebody who is legally ineligible.

Credit Score 

An individual's credit report is a good indicator of their financial health and spending habits. Various credit rating firms provide credit score reports that these companies can check. However, that may not be the case with all companies offering insurance policies.

Final Thoughts

Two-wheeler insurance allows you to get a financial backup for any losses related to your vehicle. A background check is a way for insurance companies to ensure that the right person gets compensated for the loss suffered. It indicates that your insurer acts responsibly and goes a step ahead to provide you with the best service.

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1. What do insurance companies check for two-wheeler insurance?

Insurance companies check for the accuracy of the personal information provided, along with driving records and past offences (if any).

2. Why are two-wheeler insurance background checks done?

Insurance companies carry out background checks to avoid fraud and identity theft and offer better policies to customers.

3. How does the background check impact premiums?

Insurance companies use the information from the background check to ascertain premiums, and many providers also offer customised products based on buyers' individual requirements.

4. Are background checks required by law?

The regulatory body for insurance in India does mandate background checks. 

5. How do past offences affect the premium?

Insurers look to reward responsible two-wheeler riders with customized policies. In the case of the riders with past offences regarding traffic rules and others, the insurer can either reject insurance applications or offer the same at higher premiums.

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