IRDAI Policies Regarding Two Wheeler Bike Insurance In India

Two-wheeler vehicles are a common sight in India. The middle-class population occupying a major chunk of the Indian subcontinent prefers two-wheeler vehicles to cars and other four-wheeler vehicles owing to the lower costs and greater fuel efficiency of the former as opposed to the later. According to results published in The Statistics Portal, roughly 20 million two-wheeler vehicles were sold to domestic customers between 2017 and 2018. These two-wheeler vehicles include scooters, motorcycles, and mopeds. This explains the constant increase in the purchase of 2 wheeler insurance policies and their renewals each year.

Two Wheeler Bike Insurance

The Insurance Regulatory Development Authority of India (IRDAI) manages and regulates the working of the insurance industry, be it the working of the life insurance companies or insurers selling general insurance plans. Founded in 1999, the IRDAI aims to protect the interest of the policyholders and ensure an unbiased solution to their grievances, thus, retaining the faith of Indians in the concept of insurance and bringing about a boost in the economic growth of the country.

IRDAI Sets Guidelines Regarding Two wheeler insurance

The IRDAI mandates every insurance company operating in India to follow its rules, violation of which may result in the IRDAI issuing an advisory letter or a warning and monetary penalty in an extreme situation. Not many are aware of the various rules monitoring the sale and purchase of 2 wheeler vehicle insurance plans in India. Listed following are instructions shared by the IRDAI regarding 2 wheeler insurance policies in India and how they must operate in the Indian context.

Kinds of 2 wheeler Vehicle Insurance Plans

Those looking to buy a cover for their two-wheelers have the option to choose between buying a third-party liability policy and paying for a comprehensive plan.

Third Party insurance

Mandated by the Motor Vehicles Act 1988, third-party insurance is a statutory requirement. The principle behind paying for this insurance is that the policy cover benefits the third-party involved in the accident as opposed to many other policies benefiting the insured or the insurer. The cover bought with this kind of insurance will secure against the fiscal liability towards the third party in the event of its sudden death or permanent disability resulting from an accident with the policyholder. There is no limit to the amount of compensation in case of demise or permanent injury to the third party involved in the accident. However, it excludes paying for any damages to the vehicle of the third party though the same is available with a personal accident cover subject to the condition that the driving license of the insured is valid.

As per the recent regulations of the Motor Vehicle Act, it is now mandatory for all insurance companies to provide a third-party liability cover compulsorily for five years as opposed to the standard period of one year. This rule came into effect on September 01, 2018 and is applicable to all two-wheeler vehicles registered anywhere in India.

Comprehensive Insurance

As the name suggests, this plan helps to secure a complete cover against damages resulting from a road accident, thus, securing against all kinds of damages to the vehicle and life of the third party involved in addition to securing personal accident coverage. One may consider increasing these covers by opting to pay for additional covers including engine protector, accessories cover, medical expenses, zero depreciation cover, etc. The policyholder (in this case, the insured) has nothing to pay from his pocket, thus, leaving him relatively stress-free.

Two wheeler insurance Price

This is the price you have to pay towards the premium of the 2 wheeler vehicle insurance. The important factors affecting premium calculation may include:

1. The capacity of the engine of the two-wheeler vehicle
2. The age of the two-wheeler
3. Make and model of the two-wheeler vehicle
4. Insured Declared Value (IDV) of the two-wheeler vehicle
5. Additional safety devices affixed to the vehicle
6. Driving history of the vehicle

Depreciation Rate

One can’t deny the impact depreciation has on premium one has to pay towards securing a 2 wheeler insurance cover. It is important to understand the depreciation rate while determining the insurance claim amount. Older the age of the two-wheeler vehicle, more the depreciation rate, and hence, lesser the claim amount. Depreciation is calculated at the rate of five percent for two-wheeler vehicles less than six months old, which then goes up to 15 percent if the vehicle is older than six months. The depreciation increases to 20 percent when the vehicle turns a year old, post which the depreciation rate increases by 10 percent.

In addition, the IRDAI has mentioned the depreciation rate for various parts of the two-wheeler vehicle. These include:-

1. Nylon or plastic parts and portions made of rubber are subject to a depreciation rate of 50   percent during replacement. The same holds true for tires, batteries and tubes too;
2. For parts made of fiberglass, the depreciation does not exceed 30 percent;
3. Depreciation is not applicable to glass components.

No Claim Bonus (NCB) Transfer

It pays to drive safely. The No Claim Bonus (NCB) is more like an award by the insurer to the policyholder for safe driving and no claims made throughout the policy period and is offered as discounts on next premium towards insurance policy bought to cover the two-wheeler vehicle. Since premium charges on insurance policies tend to go up each year owing to rising inflation rates, even the most minimal discount can be a big welcome to policyholders.

According to the guidelines laid down by the IRDAI, insurance policyholders do not lose out on the NCB status in case of policy transfer.

Necessary Documents

Every two-wheeler owner must possess the following documents at all times. These may include a copy of your insurance policy, a copy of the pollution under control (PUC) certificate, copy of vehicle registration and your driving license.

Policy Exclusions

There are circumstances which may result in rejection of your 2 wheeler insurance claim. These are:

1. Speeding or rash driving
2. Riding someone else’s two-wheeler vehicle
3. -Wear and tear or subsequent servicing
4. Loss of keys of your two-wheeler vehicle
5. Driving license went invalid
6. Damage resulting from riots or terrorist activities
7. Damage due to natural disasters.

Grievance Redressal

Once the policyholder has filed a claim to cover losses caused to the two-wheeler vehicle or any other, it is important that the insurer addresses the grievance proposal within the stipulated period.

1. Maximum turnaround time for grievance acknowledgment: Three days
2. Maximum turnaround time for grievance resolution: 15 days
3. Time taken to issue, process and cancel the policy: 15 days
4. Time taken to settle or reject the insurance claim: 30 days
5. Addendum report for the insurer: 15 days.