Owning a Bike or a Two-wheeler in India is regarded as a necessity. It provides comfortable travel from one place to another at a much faster pace and makes it easy to navigate our congested roads while not hurting our pockets. Also, you are likely to find a parking space for your two-wheeler almost anywhere.
In view of the ever deteriorating traffic situation in India, a bike brings the much-needed relief. Rising income levels, the better fuel efficiency, easy maneuverability, the introduction of new models and lower emission levels have been contributing to a growing demand for bikes and other two-wheeler.
The Indian two-wheeler/bike market is expected to grow at the rate of more than 9% (CAGR) over the next five years. (Source: TechSci Research)
While buying a new bike, you consider many factors such as mileage, affordability, design, brand, and other technical specifications. However, do you pay enough attention to the type of bike insurance policy you choose?
Almost 75% of the two-wheelers are uninsured in India. (Source: The Economic Times)
Would you like to remain a part of at-risk 75% or do you want a convenient two-wheeler experience without worrying about any potential damages due to human made or natural reasons?
That’s where an effective Bike Insurance Policy comes in handy.
Out of all the available options and insurance providers, as a regular citizen, how do you decide which insurance policy is most suitable for your needs?
Let’s briefly understand Bike Insurance and the essential aspects you must consider before buying or renewing your bike insurance policy.
Bike Insurance Policy: The What & Why Part
The Two-Wheeler Insurance or bike insurance is a protective cover. As per the Motor Vehicle Act, 1988, it is mandatory for all vehicle owners. It covers two-wheeler and their owners against financial liabilities that may arise in case of accidents.
Taking out two-wheeler insurance is no longer a matter of choice. It is now compulsory for all two-wheeler in India to have a 5-year third-party policy, right at the time of buying the two-wheeler.
Driving your bike without a valid insurance policy could attract a substantial penalty.
Bike Insurance Policy: Factors to Consider Before Buying
While buying a new bike insurance policy or renewing the existing one, you must make an informed decision. You must be aware of the various terms and factors surrounding two-wheeler insurance. The policy or the cover you choose should match your objectives.
You may consider the following factors:
1] Types of Insurances & Coverages:
As a first step, it is necessary for you to be aware of two different types of insurance policies available:
- Third Party Policy also called a liability-only policy, is a mandatory policy. This policy takes care of any bodily injuries and/or death or damage to the third party’s property. It also includes a personal accident cover for the owner-driver.
- Package Policy also called as a comprehensive plan. This policy includes bodily injuries, and/or death or damage to the third party’s property in addition to the loss incurred to the owner’s vehicle.
Even if you have purchased a liability-only, third-party insurance policy, you can easily opt for the comprehensive plan while renewing it. The premium for your package or comprehensive plan policy is higher than a third-party policy. The reasonably extra premium brings complete protection to you and the pillion rider, including any third party.
- Multiple Types of Covers are available with Bike insurance. Some examples: Vandalism cover, collision coverage and protection for the pillion rider. You can choose the cover as per your specific requirements.
2] Insurance Premium Influencing Aspects:
- Features: Your premium is impacted by the kind of features your bike has. The cubic capacity is one such critical aspect which is taken into consideration. As per India Motor Tariff, there are three different categories: 0 to 150CC, 150 to 350CC, 350CC and above. As the capacity increases, the premium amount also goes up.
- The City of Purchase: Indian cities are divided into two major zones. Zone A includes Delhi, Pune, Mumbai, Bangalore, Chennai, Hyderabad, Kolkata and Ahmedabad. All others are part of Zone B. Zone A comes with higher premium amounts, while Zone B has relatively lower premiums.
3] IDV or Insured Declared Value:
- It is the value at which your two-wheeler is insured, and it is maintained during the entire policy term. IDV is calculated on the basis of the manufacturer’s listed selling price after adjusting depreciation. Your bike’s age alters the depreciation. IDV is a crucial factor that needs to be considered while reducing the premium amount of your bike insurance.
4] The No-Claim Bonus (NCB) & Other Discounts:
- The No-Claim Bonus: You can make yourself eligible for a No-Claim Bonus every year that you do not make a claim. The NCB amount refers to the discount you receive on your premiums for efficient driving and zero accident claim record. For the previous claim free year, the NCB begins at 20%. For every subsequent claim-free year, your NCB discount rate could rise from 25% to 35% and then to 45% until it touches 50%.
- Other Discounts: You could also get various discounts based on the risk reduction measures taken by you. An Automobile Association of India membership can make you eligible for some discounts on the premium.
5] Compare Plans:
- While renewing your two-wheeler insurance, you must explore all available options. The premium remains the same for 2 to 3 years if you choose a long-term insurance policy. Also, in such a scenario, you don’t need to renew your policy on an annual basis.
Purchasing two-wheeler insurance is not a complicated task, as long as you know what factors to pay attention to. It would help if you went through quotes from various reputed insurance providers before selecting the most appropriate cover for yourself.
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