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Is Bike Insurance Valid for 5 Years?

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With the increasing number of motorcycles on Indian roads, the Insurance Regulatory and Development Authority of India (IRDAI) regularly updates vehicle insurance rules. This is to ensure that every vehicle owner obtains a motor policy. According to the latest directives from IRDAI, insurance for bikes online is made available in three forms; long-term comprehensive, standalone long-term third-party, and bundled policies. Among these, long-term third-party and bundled policies have five-year validity.

This article will explain the 5-year bike insurance policy, how it differs from the traditional 1-year policy, and its effects on premiums and coverage.

About 5-Year Two-Wheeler Insurance & How It Works

Following a Supreme Court ruling in September 2018, IRDAI has made it mandatory for all new two-wheelers to be issued a 5-year insurance cover. This has been done to ensure that a maximum number of two-wheelers remain insured and incidents of lapses, expired policies and uninsured vehicles are minimised.

The new standalone long-term third-party and bundled policies offer five-year coverage for two-wheelers.

Why is Bike Insurance Mandatory for 5 Years?

The number of bikes without insurance in India was very high. Given the growing presence of motorcycles, the increasing number of accidents, and the lack of insurance among two-wheelers, IRDAI (Insurance Regulatory and Development Authority of India) has mandated five-year bike insurance for every newly purchased two-wheeler.

Types of 5-Year Two-Wheeler Insurance

Two main types of two-wheeler insurance provide five-year protection for bikes. They are:

1. Standalone Long-Term Third-Party Bike Insurance

It is mandatory by law that all bike owners must have third party bike insurance. Failure to purchase the plan will result in penalties. This policy is designed to cover liabilities such as accidental death or injuries to other individuals and damage to their properties like vehicles, crops, and walls during an accident with an insured vehicle. It is valid for only a year, but now with the standalone long-term third-party insurance, you will get the coverage for five years. The main disadvantage of this bike insurance is that it does not provide Own Damage (OD) coverage. You also cannot personalise a third-party liability policy.

2. Bundled Bike Insurance

This type of policy includes both third-party and own damage cover. It provides third-party liability coverage for five years and own damage cover for one year. This essentially provides benefits similar to a comprehensive bike insurance policy. You also have the option to personalise this plan with additional features.

How Does 5-Year Insurance Work for Two-Wheelers?

Compared to an annual policy, a five-year insurance plan is intended to offer coverage for a longer period. The average cost of a five-year bike insurance is comparable to a temporary policy. The main distinctions here involve the price of the policy and the duration of the bike insurance plan. Therefore, a prolonged strategy is more advantageous than a brief one.

Benefits of the 5-Year Bike Insurance Policy

The following are some of the benefits of a 5-year bike insurance policy

1. Low Premium

The yearly cost of long-term insurance is consistently lower than that of a short-term policy. Therefore, it comes at a lower cost. You receive ongoing third-party liability coverage for 5 years, as well as short-term own damage cover.

2. NCB

When you avoid filing claims, you can receive a significant reduction on your comprehensive bike insurance policy premium. For five consecutive policy years with no claims, a 50% discount is given.

3. No Bike Insurance Challans

Riding a bike without insurance is considered a violation in India, and you will face penalties for doing so. Having a long-term policy allows you to ride the bike without any insurance-related fines under your name.

4. Continuous Protection

Maintaining ongoing bike insurance coverage is essential for guaranteeing financial protection in case of bike damage and injuries. If the bike is damaged while the policy is inactive, you are at risk of financial obligations.

If you do not maintain consistent coverage, your insurance company will be unable to assist you during any mishaps. By having long-term insurance, you will get complete coverage for 5 years for third-party liabilities and 1 year for damages to your bike.

How is NCB Calculated on a 5-Year Policy?

NCB (No Claim Bonus) only applies to the own damage portion of your motorcycle insurance policy. Since you only require a 1-year own-damage plan, the NCB calculations will be the same as for an annual comprehensive policy.

Things to Check Before Opting for Five Year Two-Wheeler Insurance

The following are some of the things you must consider while opting for two-wheeler insurance.

1. Bike Insurance Requirement

Before purchasing the policy, it is important to assess your bike insurance needs. Choose a coverage option considering variables such as the bike's age, engine displacement, where you live, how often you ride the bike, etc.

2. Risk Profile and Driving Habits

You need to purchase insurance that matches your level of risk. If you are a risky motorcycle rider, you should buy an all-round insurance than someone with a low-risk profile. For instance, you could choose to enhance the basic policy by selecting add-ons like zero depreciation bike insurance, which does not take into account the bike's depreciation during claim settlement.

3. Bike Insurance Budget

Comprehensive bike insurance can be tailored to individual needs. When purchasing it, you have the option to choose the Insured Declared Value (IDV) of the bike. If you have budget limitations, don't opt for a higher IDV. Additionally, purchase practical accessories that will be beneficial for you. Exceeding the limit with an additional feature will raise the cost.

4. Deductibles

In bike insurance, there are both compulsory and voluntary deductibles. Choosing the latter can lower your bike insurance premium. By choosing a voluntary deductible, you agree to cover a portion of the claim for bike damage to the insurance company.

Method of Buying Bike Insurance

There are two ways to purchase bike insurance: online or offline. When purchasing bike insurance from online providers, you get affordable policies and convenience. The conventional method requires visiting the insurance company in person or scheduling a meeting with an agent to buy the required coverage. Buying insurance face-to-face may lead to being convinced by the agent to select unnecessary coverage.

Compare Bike Insurance Plans

Before making a purchase, it is recommended to always compare the bike insurance plans online. This way, you can gain insight into the available policies, their coverage and their premiums.

Bike Insurance Company

It is essential to purchase from a reputable bike insurance provider if you want easy claims processing. Nowadays, it is simple to verify the insurer’s reputation by checking its social media profiles. Select an insurance company that provides outstanding post-sale services, a smooth claims process, a convenient technology platform, and quality coverage at an affordable rate.

Conclusion

Choosing a 5-year bike insurance policy ensures continuous financial coverage and removes the inconvenience of annual renewals. Policyholders can feel satisfied and secure by having comprehensive coverage for a long period. Prioritising insurance for bikes is essential to guarantee financial security and comply with the mandatory requirement for two-wheeler 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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