​Fundamentals of Two-Wheeler Insurance Policy

Driving a two-wheeler is generally considered riskier than driving a car, as bike riding individuals are more exposed to danger than those sitting in a car. Hence, to stay on the side of caution it is always better to purchase an insurance policy for your two-wheeler. There are three basic types of two-wheeler insurance policies based on the coverage they provide.

Types of Two-wheeler Insurance Plans

Following are the three types of insurance plans available for a two-wheeler:

• Third Party Insurance Policy: This type of policy offers coverage for third party bodily injuries, death or property damage in the event of an accident and protects you from having to pay these costs to meet these liabilities. The coverage for third party property damage is limited to Rs. 1 lakh under this plan. Having this type of policy is also compulsory under the Motor Vehicle Act of 1988 and driving without one could lead to a fine of Rs. 2,000 and or imprisonment for up to 3 months.

• Standalone Own-Damage Policy: This type of policy is designed to provide compensation for damages incurred by your bike due to road accident, theft, fire, natural calamities or any other mishap. Before 2019 the own-damage cover was available only as a part of a comprehensive bike insurance plan, however, now it can be purchased separately also.

• Comprehensive Bike Insurance: A comprehensive cover is a combination of own-damage and third party liability insurance. It covers damages incurred to your bike and the third party liabilities comprising injury, death or damage to their property. This plan provides insurance coverage for road accidents, theft, natural calamities, man-made disasters, riots, etc. along with all third party liabilities.

What Is Not Covered Under A Two-wheeler Insurance Policy?

A two-wheeler insurance policy does not provide coverage in the following scenarios:

• Illegal Driving: If the damage or mishap occurs due to illegal driving, i.e., driving without a licence, underage driving or under the influence of alcohol etc. it will not be covered.
• Non-Accidental Damage: This includes damages such as wear and tear, mechanical/electrical failures and breakdowns and consequential damages from a mishap.
• Damage Outside Covered Geographical Area: Every insurance policy is only applicable only in the geographical area mentioned in the policy document.

Important Terms in Two-wheeler Insurance

Following are some important terms in two-wheeler insurance which you should know:

• Insured Declared Value (IDV): The IDV is the key factor that is used by insurance companies to determine the maximum amount of money that will be assured to the policyholder in case of theft or total damage of the insured's bike or scooter. IDV is calculated on the market value of a bike. Moreover, the IDV is subjected to depreciation, which means that this value decreases with time.

• No Claim Bonus (NCB): This is the reward provided by the insurance companies when the policyholder does not make a claim in the previous year or more depending on the policy. It can be claimed only by those who renew their policies regularly and before 90 days of their expiry. Moreover, it is available in the own-damage policies and not the third party insurance policies. The NCB rises each year without a claim from 20% the first year, to 25% the second and can go up to 50% depending on the number of claim-free years.

• Add-ons: These are extra coverage available with comprehensive and standalone own-damage bike insurance plans. These can be opted for by paying an additional premium. Some popular and most-selling bike insurance add-ons include zero depreciation add-on, engine cover, tyre cover, etc.

Conclusion

In a nutshell, a two-wheeler insurance plan is insurance coverage under which the insurance company has an obligation to compensate you for the financial liabilities incurred by you due to your bike depending upon the type of insurance plan. It is a wise decision to have a two-wheeler insurance plan as it does not only helps you meet the legal requirements but also helps you meet financial uncertainties whenever required.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.