Long Term Two-Wheeler Insurance

Two-wheelers are considered to be the most affordable and convenient mode of transport in India. Two-wheelers account for approximately 70% of the vehicles running in India and bulk of these vehicles are uninsured. It is now mandatory for the users to have a two-wheeler insurance policy while buying a vehicle. A considerable number of two-wheeler users fail to renew their insurance policies after it expires. This could prevent them from using the insurance when the insured meets with an accident. To avoid this problem, the Insurance Regulatory and Development Authority (IRDA) has proposed a third-party insurance policy for three years for two-wheelers.

The benefits of two-wheeler insurance cannot be underestimated in present times. A vehicle owner can't assume the end of responsibility after insuring their vehicle. They should also renew their policy to stay protected against a variety of accidents involving two-wheelers. However, most people in India don't renew their bike insurance on time. To avail uninterrupted protection against all forms of accidents, vehicle owners must renew their bike insurance on time.

In India, driving without valid insurance is a punishable offense. From a legal perspective, it is obligatory to have two-wheeler insurance under the Motor Vehicles Act, 1988. Driving without valid insurance documents might result in a penalty of Rs.1000 or imprisonment up to 3 months or both. Also, riding on the Indian roads is not a wise option without having an insurance policy.

What is the Coverage Provided by Two-Wheeler Insurance?

A two-wheeler insurance policy covers third-party and own damage.

Third-party Damage

Here, the loss/damage inflicted by the vehicle owner to someone else’s life/property. This type of insurance covers such damages.

Own Damage

Here, the loss/damage caused to the vehicle is covered by the insurance company. The damage caused could be human-made or natural.

Each policy covers the third-party liability, but the long-term two wheeler insurance policy only includes third-party liability. If there is Own Damage due to an accident, the user must renew the insurance policy annually.

What is the Premium for three years Bike Insurance?

The premium for the two-wheeler third-party insurance for three years is supposed to be three times the annual third-party premium and it should be paid with a single bulk installment. However, this premium can't be revised in the three years. Additionally, the stand-alone third party cover can't be canceled except in a state of total loss, where the full premium for the unexpired years must be refunded by the company.

Apart from the premium, all the other terms and conditions for this new policy are the same as the one-year two-wheeler insurance policy. The information regarding the same could be acquired from any company which provides bike insurance.

This move by the IRDA works as an advantage for insurance companies since they'll be able to collect the premium for three years in bulk and save up on the administrative charges of collecting the premium amount over a period. New India Assurance offers a 30% discount to people who are applying for three-year third-party insurance for two-wheeler along with benefits of No Claim Bonus. A consumer of New India Assurance long-term two-wheeler insurance policy could avail up to 50% discount on the NCB during renewal.

The two-wheeler insurance policy that is spread across a term of three years is a blessing for the two-wheeler users since it relieves them from renewing the insurance policy each year. The fixed premium during the policy period protects them from the annual rate hike. Apart from this, they can also avail other benefits and discounts.

Insurance companies have embraced this new step and some banks have already introduced the modifications to its customers. For instance, ICICI. IRDA plans on launching a similar long-term policy for other vehicles as well.

Can You Ride Without An Active Bike Insurance?

According to the General Insurance Council (GIC) reports for the year 2015-16, nearly 60% of the 19 crore registered two-wheelers in India don't have insurance. Additionally, two-wheelers are involved in the highest number of road accidents in India as compared to other vehicles. This isn't a good sign since millions of bike owners in India lack adequate coverage against accidents which cause damage to life and property.

Why Long-Term Two-Wheeler Insurance?

The Insurance Regulatory and Development Authority of India (IRDAI) stated that there's a customary lack of awareness in India linked with the importance of an insurance policy. Most people are reluctant to purchase or renew insurance. What vehicle owners in India need to realize is that insurance policy is an exigency plan for an unprecedented incident.

For encouraging two-wheeler riders to buy vehicle insurance and renew it on time, the IRDAI has now authorized insurance agencies for providing long-term insurance policies for up to 3 years. Additionally, if someone buys two-wheeler insurance online, they can avail insurance with a few clicks.

Advantages Of A Long Term Bike Insurance Policy

There are numerous advantages of a multi-year two-wheeler insurance policy. Some of the benefits are explained below:

No requirement For Yearly Policy Renewal

A long-term insurance policy can save you from the hassles of memorizing the expiry date of the policy for renewing it every year. A long-term insurance policy is more convenient as compared to an annually renewed insurance policy.

Lower Insurance Premium

The annual insurance premium paid is lower than the long-term insurance policy. However, due to inflation, the premium rates tend to rise each year. By purchasing long-term insurance, you'll remain immune to the effects of inflation. You can also avail a range of discounts by opting for a long-term insurance policy.

Minimized Risk of Policy Lapse

Policy renewals, especially through offline channels get complicated and time-consuming at times. The policyholder must state a new IDV (Insured Declared Value) of the vehicle after getting the vehicle inspected from the authority. The entire procedure takes up a considerable amount of time and the insured individual might end up spending more on the insurance due to the yearly rise in the premium rate. Long-Term two-wheeler insurance decreases the risk of policy lapse and also keeps the vehicle owner protected for the long term.

Avail No Claim Bonus

If you haven't made any claims for a year or more, while renewing your bike insurance, you can claim for the No Claim Bonus.  The NCB is a discount offered by the insurance provider for adopting safe driving practices. A policyholder can avail an NCB of 20% of the premium amount while renewing the policy. It will be applicable to the subsequent years if you have a long-term policy.

Avoid Fines and Penalties

In India, it is a legal offense to drive a vehicle without valid insurance documents. Even if you don't consider the legal implications of getting a bike insurance policy, you should understand that an insurance policy could be of great help times of unprecedented situations such as accidents and calamities. In the absence of a bike insurance policy, you won't be able to file claims for such incidents. Long-term insurance policy saves you from running into policy lapse and paying unnecessary fines and penalties.

Trouble-Free Policy Cancellation

A long-term vehicle insurance policy doesn't force a policyholder to continue with the same policy until its expiration. The insurers can choose to withdraw from the policy whenever they want and they will be refunded the portion of insurance which remained unclaimed. However, it is essential to buy a new insurance policy before withdrawing from the existing long-term insurance policy. Additionally, you must ensure that you retain the No Claim Bonus while buying a new insurance policy.

Drawbacks of A Multi-Year Insurance Policy

Long-Term insurance can be beneficial when there's inflation in the economy, however, in the case of deflation in premium rates, you'll be at the losing side.

Additionally, if you sell off the vehicle during the policy tenure, you will incur financial losses.

In conclusion, we could say that the benefits of a long-term bike insurance policy surpass its drawbacks. There are isolated chances of deflation in the premium rate. And if you don’t plan to sell off your vehicle in the next few years, you should avoid buying a long-term insurance policy.