Know the Two-wheeler Insurance Rules Before Buying Bike Insurance in 2024

In India, two-wheeler insurance is governed by extensive and precise rules set forth by the Insurance Regulatory and Development Authority of India (IRDAI). These rules cover various aspects, including types of coverage, policy inclusions and exclusions, renewal procedures, and more. …

Know the Two-wheeler Insurance Rules Before Buying Bike Insurance in 2024 Read More »

In India, two-wheeler insurance is governed by extensive and precise rules set forth by the Insurance Regulatory and Development Authority of India (IRDAI). These rules cover various aspects, including types of coverage, policy inclusions and exclusions, renewal procedures, and more. Adhering to these rules is essential for both insurance providers and policyholders to ensure compliance and protect the interests of the insured.

IRDAI Guidelines for Two-Wheeler Insurance Covers

All two-wheeler insurance covers offered by Indian insurers must adhere to IRDAI rules. Here are the foundational types of covers and their respective guidelines:

• Third-party Liability Insurance: This is the most basic insurance policy required for all two-wheeler owners in India as per the Motor Vehicles Act of 1988. It provides coverage for third-party liabilities such as death, injury, or property damage to a third party.
• Comprehensive Insurance: Comprehensive Bike Insurance encompasses both the legally required Third-party Liability Cover and Own Damage (OD) cover. The OD component safeguards against accidental damage, natural disasters, theft, and additional perils. Moreover, policyholders have the option to bolster their coverage with add-ons for further protection.

IRDAI Rules for Insurance Coverages

Under the two foundational plans, IRDAI has established specific rules for coverages:

• Third-party Bike Insurance: This plan provides financial protection against third-party liabilities, including injury, death, or property damage. Compensation is provided based on the loss or injury suffered by the third party, with considerations for net worth in the case of death.
• Comprehensive Bike Insurance: This plan covers the cost of repairing or replacing bike parts in case of an accident, compensates for the Insured Declared Value (IDV) in theft or total loss scenarios, and provides coverage for damages due to natural or manmade calamities. The coverage can be further customised with add-ons.

The new IRDAI rules introduced in 2020 include penalties for various offences related to bike riding. Penalties ranging from ₹500 to ₹10,000 are imposed for offences such as riding without a license, overspeeding, dangerous driving, and more.

Exclusions of Two-Wheeler Insurance Policy

Any damages resulting from electrical or mechanical faults, absence of necessary documents like a valid driving license, purposeful damage for inauthentic claims, and more are not covered.

IRDAI Rules for Personal Accident Cover

A Personal Accident (PA) cover is mandated by the government and must be purchased separately while insuring a vehicle. Here are some IRDAI rules regarding PA coverages:

• The sum insured for PA cover can go up to ₹15 lakhs, with compensation percentages varying based on the type of loss.
• Compensation percentages range from 50% to 100% for different types of losses such as loss of limbs, eyesight, or death.

IRDAI Rules for Depreciation Calculation

As per IRDAI, depreciation rates vary for different components such as fibreglass (30%), rubber, batteries, plastic parts (50%), and more.

Mandatory Documents and Renewal Rules

IRDAI mandates certain documents to be carried in an insured bike and provides rules for timely renewal:

• Mandatory documents include two-wheeler insurance certificate, driving license, Pollution Under Control Certificate, and Registration Certificate copy
• Renewal must be done on time to maintain coverage, and failure to renew within 90 days of expiry can result in loss of accumulated No Claim Bonus (NCB)

Factors Affecting Bike Insurance Premium

Several factors influence bike insurance premium calculation, including bike age, Insured Declared Value (IDV), discounts, add-ons, late renewal, No Claim Bonus (NCB), modifications, and more.

IRDAI Rules for Third-Party Liability Insurance

The IRDAI has established precise guidelines for third-party insurance to safeguard the interests of both the policyholder and the third parties involved in accidents. Under its rules, third-party liability insurance must cover the following:

• Compensation for third-party injuries: If a third party is injured in an accident involving the insured two-wheeler, the insurance company must provide monetary compensation to cover medical expenses and other related costs.
• Property damage coverage: Third-party liability insurance should also cover damages to third-party property caused by the insured vehicle. This includes damage to vehicles, buildings, or other structures.
• Death benefits: In the unfortunate event of a third-party death resulting from a two-wheeler accident, the insurance company must provide compensation to the deceased’s family or legal heirs as per the IRDAI guidelines.

It’s important for policyholders to carefully review their third-party liability insurance coverage and ensure that it meets the minimum requirements set by the IRDAI.

IRDAI Rules for Comprehensive Bike Insurance

The IRDAI has established rules and guidelines for comprehensive bike insurance to protect policyholders and ensure fair treatment by insurance companies. Under these rules, comprehensive bike insurance must cover the following:

• Own damage coverage: Comprehensive insurance policies should provide coverage for accidental damage to the insured two-wheeler. This includes damage caused by collisions, overturning, fire, theft, vandalism, and natural disasters such as floods, storms, or earthquakes.
• Insured Declared Value (IDV): The IDV represents the maximum amount payable by the insurance company in case of total loss or theft of the insured vehicle. IRDAI rules require insurance companies to calculate the IDV accurately based on the vehicle’s market value and depreciation factors.
• Add-on coverage options: Insurance companies offer various add-on covers to enhance the coverage provided by comprehensive bike insurance policies. These add-ons include zero depreciation cover, roadside assistance, engine protection, and personal accident cover for passengers. IRDAI rules ensure transparency in the sale of add-on covers and prohibit insurers from imposing unnecessary or unfair conditions on policyholders.

By following IRDAI guidelines, both insurance providers and policyholders can ensure compliance, transparency, and fairness in the insurance industry. From mandatory third-party liability insurance to comprehensive coverage options and personal accident cover, IRDAI rules aim to protect the interests of all stakeholders involved.