Get to know the two-wheeler insurance rules before you buy bike insurance

Insurance Regulatory and Development Authority of India (IRDAI), has brought about certain changes in the rules. Some major rework of the bike insurance rules has taken place over the last 12 months. However, no two-wheeler can run on the road without the third-party (TP) bike insurance cover. Here are the 3 rules you should know before you buy bike insurance online

1. Long term bike insurance

If you purchase a new bike after September 1, 2018, the third-party premium has to be paid upfront for 5 years. Two-wheeler purchased before the date may continue to pay the premium as decided. This premium is only the third-party premium, which as it is fixed by the Insurance Regulatory and Development Authority of India (IRDAI) based on the capacity of the vehicle, is to be paid up front. The own-damage premium may still be paid on a yearly basis.

However, there is no impact on the IDV and the no-claim bonus portion and nor it will be correct to say that premium will increase, as it is only the upfront cost that will go up. After paying a 5-year premium upfront, you do not need to pay any Third-party premium for the next four years.

Options available: 

Both third-party (TP) and own-damage (OD) coverage are for 5 years. The premium is also collected for 5 years and the renewal of bike insurance policy will come into question only after 5 years when the insurance policy is about to expire. If anyone wants to pay the OD premium only for 1 year and think of renewing it the next year onward. One can always opt for a bundled policy, where the third party coverage is of 5 years but OD cover is applicable for 1 year. Here, the OD premium has to be revived every year as compared to a TP cover which is possible for renewal bike insurance only after 5 yrs.

2. Enhanced personal accident cover (PAC) 

The coverage for a personal accident is up to Rs. 15 lakh. This rule by the IRDAI will be applicable to the existing bike owners. While, earlier the annual premium of Rs 50 was to be paid for a cover of Rs 1 lakh, now the annual premium will be Rs 750 for a cover of Rs 15 lakh. Moreover, bike insurers cannot force the owners to take a long term PAC and hence one may opt to buy a 1 year PAC as well.

3. Stand-alone PAC policies

A personal accident policy (PAC) covers accidental death or pays a certain sum of money to the policyholder in case of any partial or total disability arising out of a road accident.

The Insurance Regulatory and Development Authority of India (IRDAI) has unbundled the compulsory personal accident cover and permitted the issuance of a stand-alone policy from January 1, 2019. So, effectively, a policyholder needs to pay for PAC again if he or she has a PAC of at least Rs. 15 lakh bought from the same or any other bike insurance company. 

While a large number of people go for liability-only policies due to the fact that they are obligatory under the Indian Motor Vehicles Act, a comprehensive insurance policy is a better option because it offers cover against the wear and tears to your own vehicle, irrespective of the cause of the damages. Thus, when comparing policies, it is important to first understand what kind of cover you need.