Bike Insurance: What It Is and How It Works

India is the second most populated country in the world. While our road network is improving, it is far from robust. With people clustered around cities and commercial hubs, long travel hours and traffic jams are a common sight in India. In such a landscape, a two-wheeler can save time and money by cutting through traffic with more ease than a four-wheeler.

However, India also ranks high in the number of road accidents every year. Two-wheelers are more prone to accidents compared to four-wheelers. Further, two-wheelers are also exposed to the risk of getting stolen, suffering damage due to natural disasters, man-made disasters, and various other external factors. Depending on the damage, the cost of repair can be high. Also, if your bike causes an accident that results in the damage of a third-party person or property, then paying for the damage caused can burn a hole in your pocket. All these risks can be managed better by purchasing a bike insurance policy.

What is Bike Insurance?

Insurance for two-wheelers offers coverage for damage caused to a third party or self against damages caused due to an accident, mishap, or disaster. Based on the type of policy you choose, the insurer offers coverage by charging a nominal premium for a fixed term. The policy needs to be renewed at the end of the term for it to stay in force.

Types of Bike Insurance Policies

There are two broad categories of bike insurance:

  • Third-party liability – A third-party bike insurance policy offers coverage for damage caused to a third-party person or property due to an accident caused by the insured bike. In India, it is mandatory for every bike to have minimum third-party liability coverage. However, these policies offer no coverage for any damage suffered by the insured bike or policyholder.
  • Comprehensive policy – A comprehensive insurance policy for two-wheelers offers coverage for damages sustained by the insured bike due to an accident, mishap, or disaster.

How is The Premium Calculated in a Bike Insurance Policy?

The premium of a third-party bike insurance is determined by the IRDAI or the Insurance Regulatory and Development Authority of India based on the engine capacity of the two-wheeler. However, the premium of a comprehensive policy can vary based on a wide range of factors. Here are some essential factors that impact the computation of premium in a bike insurance policy.

  • IDV of the Two-Wheeler

IDV or the Insured Declared Value is the sum insured of a two-wheeler insurance policy. It is the maximum amount of claim that the insurer will pay. Insurance providers calculate IDV by using the listing price, make and model of the bike, and depreciation, if any.

  • Engine Capacity

The premium of a third-party policy is determined by the engine capacity of the two-wheeler. Currently, the premium rates for these policies are as follows:

What Questions do Two-Wheeler Insurance Companies Ask and Why?

  • 0 < Engine Capacity < 75cc: ₹538
  • 75 < Engine Capacity < 150cc: ₹714
  • 150 < Engine Capacity < 350cc: ₹1366
  • Engine Capacity > 350cc: ₹2804
  • Where is the Vehicle Registered?

Motor Tariff India divides the country into two broad zones:

  • Zone A: This includes the top 8 cities in the country – New Delhi, Mumbai, Chennai, Kolkata, Pune, Bangalore, Hyderabad, and Ahmedabad.
  • Zone B: All of India except the cities mentioned in Zone A.

Usually, two-wheelers registered in Zone A have a higher premium than those registered in Zone B.

  • How Old is the Bike?

Old bikes have a higher premium than newer bikes. Hence, the age of the bike plays an essential role in the calculation of the premium of the insurance policy.

How are Claims Processed in Bike Insurance?

When your bike meets with an accident, you can file a claim with the insurer; that is how bike insurance works. Here are two situations to consider:

  • Total Loss Or Constructive Total Loss

Total Loss is when your bike is damaged beyond repair due to an accident, mishap, or disaster. In such cases, the insurer processes the sum assured (minus depreciation) as the claim amount to you.

However, if the bike is damaged in a manner that the cost of repair is more than 75% of its IDV, then it is called Constructive Total Loss. In such cases, the insurer treats it like a Total Loss claim.

  • Theft

Comprehensive bike insurance policies offer coverage for the theft of the insured two-wheeler too. In such cases, the policyholder is required to file an FIR with the nearest police station and forward a copy of the same to the insurance provider. Once the police confirm that the vehicle is not recoverable, the insurer processes the claim.

Buying Two-Wheeler Insurance Online

You can easily purchase online insurance for two-wheelers. Here is a quick walkthrough:

  • Log in to the website of the insurance provider
  • Submit details of the vehicle and some personal details
  • Select the type of policy you want to buy and the add-ons based on your needs
  • Make payment

Summing Up

When you own a two-wheeler, you need a helmet to protect you physically from injuries and an insurance policy to be financially protected in the event of an accident or disaster. While a third-party insurance policy is mandatory, a comprehensive policy offers complete coverage to your vehicle. Before you choose a policy, make sure that you assess your riding habits and determine what you need from the insurance policy. Compare plans and make an informed decision. Good Luck!