Can I Buy 1 Year Insurance for A New Bike?

Posted on: Sep 26, 2024 | 3 mins | Written by: HDFC ERGO Team

Can I Buy 1 Year Insurance for A New Bike?

In India, specific rules govern the type and duration of insurance policies that new bike owners must purchase. 1-year insurance coverage is not available for new vehicles. The Insurance Regulatory and Development Authority of India (IRDAI) has implemented a mandatory 5-year third-party insurance for bikes to reduce the number of uninsured vehicles on the road.

In this article, we will detail the insurance packages available for new bikes and the one-year own-damage (OD) cover that can be purchased with the mandatory five-year third-party cover.

Understanding Insurance Requirements for New Bikes

When acquiring a new bike, one must be aware of the insurance requirements set by regulatory authorities. After the introduction of the mandatory 5-year third party insurance for new two-wheelers, a motorcycle owner could buy only any one of the following policies:

1. A long-term stand-alone third-party insurance (5 yrs)

2. Bundled insurance {5-year third party + 1-year own damage cover(OD)}

3. Long-term comprehensive insurance (5-year third party and OD).

1. Long-Term Stand-alone Third-Party Insurance

The 5-year third party bike insurance is compulsory for all new two-wheeler owners. It covers liability for injuries caused to third parties and damages to their properties in case of an accident involving the insured vehicle.

The extended duration is designed to provide prolonged financial protection and ensure compliance with legal obligations. With this policy, new bike owners are relieved from the hassle of annual renewals, allowing them to enjoy peace of mind for longer.

Purpose and Benefits

The following are the purpose and benefits of long-term third-party insurance.

• Continuous Financial Protection

One of the primary purposes of long-term third-party insurance is to offer continuous financial protection to the bike owner. In the event of an accident where the policyholder is at fault, this insurance covers the legal liabilities related to damages caused to third-party property or injuries sustained by other individuals. This ongoing coverage eliminates the need for the bike owner to worry about unforeseen financial burdens during the policy’s tenure.

• Legal Compliance and Security

Long-term third-party insurance also ensures that the bike owner remains compliant with legal requirements for an extended period. It is legally mandatory, and failure to maintain it can result in penalties.

By opting for a 5-year plan, bike owners fulfil this obligation without the annual task of renewing the policy, thereby securing their vehicle's legality on the road.

• Contribution to Road Safety

With a long-term policy in place, there is a reduced risk of uninsured vehicles on the road, as the insurance remains active for five years without lapsing.

This ensures that in the unfortunate event of an accident, the affected third parties are more likely to receive compensation, promoting a safer driving environment for everyone.

• Cost-Effectiveness and Convenience

Opting for a long-term third-party insurance policy can also be cost-effective. Insurers often offer discounts on long-term plans, making it a more economical choice.

Combining Own Damage Cover With Long Term Third-Party Insurance

You can purchase a stand-alone one-year own damage (OD) cover while securing a five-year third-party liability insurance for your new bike. This approach enables you to enjoy the advantages of comprehensive bike insurance without committing to a long-term, extensive plan. When you buy a 1-year own damage cover, you have to renew it every year to get continued coverage for your vehicle’s damage.

• Flexibility in Choice

This approach provides greater flexibility, allowing bike owners to choose different insurers for third-party and own damage covers based on their preferences, coverage benefits, and premium costs.

• Customisation of Coverage

Standalone OD policies can be customised with add-ons such as zero depreciation cover, roadside assistance, and engine protection, enhancing the overall coverage according to individual needs.

• Renewal and Continuity

The policyholder can assess and modify their coverage during each renewal period, ensuring that the insurance remains aligned with the bike's condition and usage patterns.

2. Bundled Insurance Policy

A bundled insurance policy includes a 5-year third-party cover along with a 1-year own-damage cover. This arrangement allows bike owners to fulfil mandatory requirements while enjoying comprehensive protection for the first year. To receive continued extensive protection, the OD needs to be renewed each year.

Bike owners have the flexibility to renew with the same insurer or opt for a different provider based on premium rates and service quality.

Advantages

The bundled policy offers convenience by consolidating both covers under a single policy for the initial year. It simplifies the purchasing process and ensures immediate comprehensive coverage from when the bike is bought.

3. Long Term Comprehensive Insurance

This vehicle insurance type provides coverage for third-party liabilities and own damage for five years. With this policy, you can avoid the hassle of renewing the insurance every year. For long-term policies, insurers often offer discounts on the premium.

How to Purchase a Vehicle Insurance for Your New Bike?

Acquiring motor insurance for your new bike involves a straightforward process.

1. Assessing Insurance Needs

Begin by evaluating the required coverage based on bike model, usage frequency, and personal preferences. Consider potential risks and the financial implications of repairs and replacements.

2. Comparing Insurance Providers

Research and compare various insurance companies offering bundled and standalone policies. Examine premium rates, coverage benefits, claim settlement ratios, and quality of customer service to make an informed decision.

3. Selecting the Appropriate Policy

Choose from the three long-term insurance options based on convenience and customisation needs. Ensure that the selected policy meets all regulatory requirements and provides adequate coverage.

4. Completing the Purchase

The insurance can be purchased online or through an agent. Provide all necessary documentation, including bike registration details and personal identification. Review the policy terms and conditions carefully before finalising the purchase.

5. Understanding Policy Terms

Familiarise yourself with the inclusions, exclusions, claim procedures, and renewal processes outlined in the policy document. Awareness of these details is crucial for the effective utilisation of insurance coverage when needed.

Renewal and Continuation of Coverage

Maintaining continuous and adequate insurance coverage is essential for ongoing protection and compliance with legal requirements.

1. Annual Renewal of OD Cover

The own damage cover requires annual renewal. Mark the renewal dates and initiate the process ahead of time to avoid lapses in coverage. Evaluate any changes needed in the coverage during each renewal period.

2. Reviewing and Updating Coverage

Over time, the value and condition of the bike may change, necessitating adjustments in the insurance coverage. Regularly review the policy and update it as needed to ensure optimal protection.

3. No-Claim Bonus Benefits

Policyholders who do not make any claims during the policy period are eligible for a no-claim bonus (NCB), which provides discounts on premiums during renewal. Maintaining a claim-free record can lead to substantial savings over time.

Conclusion

Owners of new bikes must get a long-term third party insurance as mandated by the law. You have three options to get five-year third-party liability cover for your vehicle. Understanding and selecting appropriate policies ensures comprehensive protection for new bike owners.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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