Frederick Jace
An insurance policy for two-wheelers acts as a financial umbrella during the time of an unfortunate accident or damage. It helps you meet financial liabilities without burning a hole in your pocket. Purchasing an insurance policy for bikes can be confusing when you see so many options in the market. Deciding the right one for you may not come easy unless you have a clear understanding of what you need and what kind of policies are there in the market.
Components and Types of Two-wheeler Insurance
There are two major components of vehicle insurance – third-party coverage and coverage for own damages. While both components offer security against accidents, they both differ in their offerings.
A third-party cover, as the name suggests, covers claims made by the third party or the other party involved in the accident. This does not cover damages caused to your vehicle. The own damage insurance, on the other hand, covers only damages caused to your vehicle.
It should be noted that it is a legal mandate in India to have at least a third-party insurance policy. So, having a third-party bike insurance cover is more of a necessity. However, staying covered for your own vehicle damage is equally important, even though it is a choice. This is because in case of major damage to your bike, if you were to shell out expenses from your pocket, it may deplete a major chunk of your savings.
In 2018, the Supreme Court mandated that the minimum period for the third-party insurance policy for new bikes is 5 five years. So, you can either buy a comprehensive insurance policy, a mandatory third-party policy and a standalone policy separately, or you can buy a bundled insurance policy.
Understanding Standalone Policy
A standalone insurance policy for bikes provides insurance coverage for the damage caused to your bike. Also known as its damage policy, it safeguards your two-wheeler against damages incurred due to natural calamities, accidents, fire and theft.
Inclusions of a standalone policy:
- Theft: The policy insures you as per your insured declared value in case the bike gets stolen.
- Accidental damages: The policy covers damages sustained by your bike at the time of an accident.
- Fire: You can claim coverage in case your bike got damaged in a fire or explosion
- Natural and man-made disasters: The coverage is extended to damages caused to bikes during natural disasters like earthquakes, floods etc as well as man-made disasters like riots, strikes etc.
What is not included?
- Wear and tear: Consequential damages to the bike, which occurred over time are not covered in the stand-alone or own damage cover policy.
- Negligence: In case the bike got damaged due to negligence or irresponsible behavior of the owner, the policy does not offer any coverage.
- Third-party liabilities: The policy provides no coverage or financial assistance to damages claimed by a third party in case of collision or accident.
Benefits of a Standalone Policy
- Economical: If compared to the cost of comprehensive two-wheeler insurance, an own damage cover is relatively cheaper.
- More flexible: The standalone policy can be purchased for smaller tenures like one or two years so the bike owners are not bound by the policy for the long term. The plan can be renewed every year as required at the owner’s discretion.
- More options: With the option to choose a standalone policy for their damage plan, bike owners now have the option to avail of third-party insurance and own damage insurance from different insurance providers.
Understanding Bundled Policy Cover for Two-wheelers
For those looking for an insurance policy for bikes that offers coverage for their vehicle as well as a third party, a bundled insurance policy comes into play. It provides one-year coverage for insured bikes along with a three-year coverage against third-party damages. The longer coverage for the third party keeps you legally compliant while the one-year cover for your damages allows you to renew the policy as required every year.
Inclusions in a bundled insurance policy:
- Accidents/natural disasters/Theft: The policy provides all the coverage as per the standard inclusions of a stand-alone policy and covers damages caused by disasters, theft and accidents.
- Third-party liabilities: The policy also offers financial assistance for third-party claims at the time of accident or collision.
- Personal accident coverage: This policy also gives coverage to the owner in case of severe injuries or death of the owner/driver in case of an accident.
What is not included?
- Damage outside the geographical coverage: The policy does not offer any claims if the damage occurred beyond the geographical regions the policy is purchased for.
- Damage caused due to drunk driving: For damages caused under the influence of alcohol or any other substance, the policy offers no coverage.
Benefits of Bundled Insurance Policy
- Relatively more economical: For those looking for wider coverage at reasonable rates, a bundled insurance policy for two-wheelers is an ideal choice. While a comprehensive insurance policy gives complete coverage for three years to both the insured vehicle and third party, it is definitely more expensive. The bundled policy reduces the premium amount considerably allowing you to renew the policy terms after one year.
- Keeps you compliant: While giving you an option to renew your damage coverage after one year, the policy covers the third party for three years, saving you the hassle of renewing your policy every year to fulfill the mandatory insurance requirements.
- Covers for own vehicle damage: A bundled insurance policy for bikes along with the third-party liability cover also provides protection against damage to own vehicle. If you want the benefits of keeping your bike insured against damages and accidents, then a bundled insurance policy is the best option to opt for.
What is Better – Standalone or Bundled Insurance?
While bundled insurance gives you all-around coverage under the same premium amount, it does come at a cost. For those who have purchased a new bike and looking for third-party coverage, paying a little extra to get their vehicle damage covered for a year is a good call as it helps you assess the need for the same coverage.
However, for those who already have had third-party insurance for a while, a standalone policy can come in handy. You need not wait for your present policy to expire to get comprehensive or bundled insurance. You can simply get additional standalone insurance for a year along with an existing third-party insurance policy to give more coverage to your bike. The policy allows more flexibility into the mix as you are allowed to pick a different insurer for this policy.
If you are looking for a two-wheeler insurance policy for bikes, it is suggested to understand the legal requirements and take into consideration your frequency of use, age of bike and IDV before deciding the type of policy and premium amount!
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.
