Renewing Third Party Bike Insurance? Know About the New IRDAI Rules
Renewing Third Party Bike Insurance? Know About the New IRDAI Rules
Published on September 21, 2022. EST READ TIME: 3 minutes
![Renew Third Party Bike Insurance. Renew Third Party Bike Insurance.](/images/default-source/two-wheeler-insurance-page-images/renew-third-party-bike-insurance.jpg)
Owning and driving a vehicle, be it a car or a two-wheeler gives a different kind of joy. While driving, it is imperative to follow the traffic rules but when you own a vehicle, you should also know the rules and regulations about insurance. Having a third party bike insurance is mandatory by law and everything you need to renew third party bike insurance, . you should also check if there are changes in the rules and guidelines set by the Insurance Regulatory and Development Authority of India (IRDAI).
This body has set very clear and precise rules for insurance of bikes in the country leaving no scope for ambiguity. The rules cover everything about insurance be it, coverage, inclusions, and exclusions, and of course the rules to renew third party bike insurance.
There are mainly two types of coverage that a bike owner can have when it comes to insuring his vehicle. First is the third party bike insurance which is compulsory and the third is comprehensive coverage which includes third party and own damage insurance.
In this post let us understand third party bike insurance and the new rules set by the IRDAI.
What is Third Party Bike Insurance?
The third party bike insurance in a very simple way is the most basic insurance you can have for your bike. As per the Motor Vehicles Act, 1988, this insurance is compulsory for any vehicle insurance on Indian roads. This policy provides coverage against any loss, injury, damage and death to a third party due to the vehicle. Any damage or compensation payable to a third party is covered under this policy.
What does the third party insurance policy cover?
As mentioned above, the third party bike insurance policy covers the insured against any liability to a third party. The primary coverage of this policy is as follows:
● Monetary compensation is given to the third party in case of any injury or death
● This compensation is payable as per the injury or loss suffered by the third party
● Any damage to the property of the third party is also covered in this insurance. The compensation is calculated as per the intensity of the damage
● In the case of net worth, compensation is paid to the third party but the amount is dependent on the net worth of the deceased person
What are the benefits of third party bike insurance?
There are many benefits of a third party bike insurance and thus, it is made mandatory. Let us see the main benefits of the policy.
Documentation
Whether to buy a new policy or to renew third party bike insurance, the process is simple and so is the requirement of documents. The formalities are simple and few checks and inspections are needed. The main reason behind this is the bike is not insured under the policy. It can be bought online or offline and the process is simple and quick.
Financial Obligation
Any loss or damage caused to a third party due to the insured is covered and this reduces any financial obligation that will arise. With no financial stress, one can easily ride the bike.
Reduces Stress
With the increasing traffic, accidents can happen anywhere and also the number has drastically gone up. In such a case if there is any damage or loss caused it just adds to the stress. It can cause trauma and the financial stress to pay for the loss can just add to the worries. With a third party bike insurance, there is no mental stress as the insurance company takes care of all financial obligations.
Legal Compliance
As the third party bike insurance is mandatory, owning a policy ensures all laws are followed and there is no scope of fines and penalties by the police.
Third party bike insurance rules in India
In 2018, the IRDAI, after following the orders of the Supreme Court, made it compulsory for all new bikes to have a 5-year third party cover and the premium for the same has to be paid upfront. For people having a bike before that time, they can continue to renew third party bike insurance, as per their system.
The premium for the third party bike insurance is fixed by the IRDAI depending on the capacity of the vehicle and thus, has to be paid for 5 years at the time of taking the bike. If the insured decides to take a comprehensive cover, the policy must be taken for 3 years instead of 5.
At first, this may seem to be an additional expense for no reason, but when analysed, it is clear that there are many advantages of the same. Let us talk about a few:
Premium
When you buy a new vehicle, you pay the premium for 5 years as there is a lock-in. Due to this, you are safe from any increase in premiums which can be done annually. Thus, with a lock-in, you end up saving a premium.
No need to renew third party bike insurance
When you have paid for 5 years, your policy is valid and there is no stress in remembering to pay for the premium every year in order to renew the policy. This ensures you are covered at all times during the 5 years, and at no point are riding on the bike without a third party insurance as this is illegal.
No Claim Bonus
In a 5-year policy, if you take a claim, the NCB just goes back to the previous slab unlike an annual policy where you lose the bonus. Thus, in a 5-year policy, the benefit of the no-claim bonus continues.
Refund
In case the policy is terminated, the insured gets a refund of the part percentage for the unutilised term ensuring you do not lose money. There can be various reasons for termination like theft of the bike or a total loss.
Conclusion
Bike insurance is important as it helps in reducing financial stress in case of an accident. Keeping this in mind, the government has made third party bike insurance mandatory whereas comprehensive insurance is still an option. The new rules of the IRDAI have made it obligatory to take third party insurance for 5 years upfront as this will also reduce the need to renew third party bike insurance. This makes it more convenient and also avoids legal penalties.
Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.
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