Two-wheeler insurance could be troublesome. But with this post, I’m going to share few things that you should know before the purchase of a two wheeler insurance.
If you don’t want to get into trouble or are interested in saving money, then you must know few of the standard terminologies that come into picture when you buy a bike insurance policy.
Facts you must know about two-wheeler insurance:
- Types of two wheeler Insurance
- Who decides the premium?
- What does the Insured Declared Value (IDV) mean?
- How to save money with No Claim Bonus
- What is a long-term policy?
Two Types of Two-wheeler Insurance policy:
There are two types of policy –
- Third Party Insurance
- Comprehensive Insurance
What is third-party two-wheeler insurance?
Third-party two-wheeler insurance is mandatory. As per the Motor Vehicles Act, 1988, it is mandatory to own a third-party insurance policy to ride legally on the Indian roads.
It also provides personal accident cover to the owner-rider and optional pillion cover. It does not cover any loss or damage to your two-wheeler due to any unfortunate incident.The very first insurance cover that you get from your dealer is always a third-party liability insurance cover!
. It covers anybodily injury, loss or damage to the third- party property, or accidental death.
Where third-party can be pedestrians, people/passenger in another vehicle, and damages to third person’s property up to Rs.1 lakh. Not only this, but a third-party two-wheeler insurance cover also offers a personal accident cover for the owner driver.
If you wish to protect your two-wheeler and not just cover third party liability, you must opt for a comprehensive two-wheeler insurance. If you wish to offer a complete protection to your bike, it is recommended you opt for a comprehensive car insurance.
What is comprehensive two-wheeler insurance?
A comprehensive policy covers the own damage incurred to your bike and third-party liability cover. It also coversthe risk of theft of your insured two-wheeler, which is not covered when you buy only a third-party cover.
Who decides the premium?
For the third-party policy, IRDAI decides the premium.
And for the comprehensive two-wheeler Insurance policy, each insurance company decides the premium.
The premium is based on the Insured Declared Value (IDV), No Claim Bonus (NCB) and other Discounts, etc.and so the premium may vary from insurer to insurer.
What does the Insured Declared Value (IDV) mean?
Insured Declared Value (IDV) is the current market value of your two-wheeler.
It is the maximum amount the insurance company reimburses in case of theft of your bike or in case your bike gets damaged beyond repairs.
The IDV decreases over the years due to the depreciation. The IDV in the second year will be higher than that in the third year. But every insurance company may offer a slightly different IDV because of which the premium changes.
How to save money with No Claim Bonus?
No Claim Bonus is a discount on the premium amount for the next year, provided you make no claims during the policy period. This is a type of reward that your insurance company offers you for being a good driver J No Claim Bonus is cumulative so it keeps increasing every claim-free year.
You can get up to 50% discount on the premium for consecutive 5 claim-free years.
What if you make a claim in the third year? The NCB falls back to ZERO.
Here’s one way to protect you accumulated NCB – opt for a long-term policy.
What is a long-term policy?
Most of the insurance companies offer a long-term insurance policy for two wheelers. A long-term policy maybe for 2 years and 3 years. Almost all the insurance companies offer a three year plan.
When you opt for a long-term policy, you get a single insurance policy that covers your two-wheeler for 3 years. This way you save money on yearly hikes on third-party premium. One of the benefits of a long-term policy is you indirectly protect your accumulated NCB. Most insurance companies allow one claim during the tenure and your NCB does not drop to zero. As the case is when you opt for a one year policy. Besides, you don’t have to break your head for timely renewals!
This article is a gist of what you should know before buying a two-wheeler insurance policy. So compare the plans and check IDV offered, utilize your accumulated NCB (if any), and try to opt for a long-term two-wheeler insurance policy when you buy online.