Why Is It Mandatory For New Two Wheeler’s To Be Issued A Five Year Insurance Cover?
If you take a look at the statistics of road accidents in India over recent years, you can see a steep rise in the graphs, especially when it comes to two-wheelers. With more and more new vehicles on the road every year, the number of accidents has also increased.
Hence, keeping the best interest of the public in mind, the Government of India has come up with the Motor Vehicle Act, which makes it mandatory for all vehicle owners to have motor insurance. If you don’t have one, we suggest you purchase insurance for a two-wheeler.
The story does not end here. Following a Supreme Court hearing in 2018, the IRDAI (Insurance Regulatory and Development Authority of India) made it mandatory for all new two-wheelers to have bike insurance for minimum-period of five years. However, the mandate was recently overturned by the Government and the IRDA as they realised that making long-term bike insurance policies mandatory increased the on-road prices of new two-wheelers. This impacted the sale of bikes, which was further exacerbated by the COVID situation. So, to fuel the sale of two-wheelers, the compulsion to buy long-term policies was lifted.
However, there are a few benefits of buying long-term two wheeler insurance for your bike. Let us have a look.
Long-term Two-Wheeler Insurance Plan in India
The compulsion to buy long-term bike insurance policy was introduced mainly for the below reasons:
- To ensure that the maximum number of two-wheelers remain insured
- Minimise incidents of expired policies
- Minimise the number of uninsured vehicles
However, after the mandate was lifted, buying long-term bike insurance is not a compulsion but a matter of choice. Government regulation had made five-year policies mandatory for bike owners. However, as per the new IRDA regulations, bike owners have a ‘choice’ to opt for a bike insurance policy for a tenure of 1 year to 3 years. The tenure for long-term policies has been capped at 3 years by the IRDA.
The Indian Motor Vehicles Act makes it mandatory for bikes to be insured with at least a third-party insurance policy that covers only third-party liabilities. But for complete protection against damage or theft of the bike, personal accident cover for owner-driver and coverage against third-party liabilities, it is advisable to get a comprehensive bike insurance policy for your two-wheeler.
Impact of Long-Term Insurance Plan:
- Save on Premium:
When you opt for a long-term bike insurance plan, you pay a one-time premium payment, and your policy will stay valid for a period of 2-3 years. In this method, you are not exposed to the rising charges of premium which you might otherwise have to bear if you purchased a 1-year motorcycle insurance online plan.
The annual price increase in premium will not affect you when you have a long-term insurance plan. This means you will save on your premium amount.
- Need Not Bother About Yearly Renewal:
As your insurance plan is for a longer tenure, you need not even worry about two-wheeler insurance renewal online each year. This will remove your risk of getting caught with outdated insurance completely. Therefore, in those 2-3 years, in case of any unfortunate event or accident, you need not pay for your bike repairs or health facilities for yourself or a third-party from your pocket.
Once you have paid your premium amount while purchasing the insurance, you need not worry about it for the entire policy term.
- Special NCB Benefit:
The NCB (No-Claim Bonus) is an add-on for bike insurance where you get a discount when you do not make a claim on your insurance during the year. You can avail this discount while renewing your bike insurance in the subsequent year.
In case of one-year insurance, you will lose your NCB entirely even if you make a single claim. However, for long-term insurance plans, if you make a claim, it does not become null. It only gets reduced to the previous slab in percentage. Hence, with a two-year or three-year insurance plan, you have a special NCB benefit.
- Earn Refund If Policy is Terminated:
Just like NCB, in a long-term insurance policy for a bike, you do not lose the entire premium amount in case the policy is terminated. So, for example, if you intentionally terminate your long-term policy for a valid reason (such as total loss or theft), you will receive a refund of a partial percentage amount on your premium.
As discussed above, long-term bike insurance is extremely beneficial if you are assured about the reliability and trustworthiness of the insurance company. Long-term plans allow you to save on premium and rest assured about the renewal for at least three years. However, make sure that you research the insurance plan and provider, check their claim settlement ratio, read the policy document and then choose the best bike insurance plan for your two-wheeler.