Is Bike Insurance Mandatory For 5 Years?

When it comes to the security of your bike, nothing is more valuable than an insurance policy. If you have bought a car or bike insurance in the recent months, you must have questioned this at least once, is bike insurance mandatory for 5 years? If you ask us, yes, if you purchase a new bike or car, there will be a mandatory long term insurance policy that you need to buy. There must be many questions whirling in your mind right now. But, need not worry, we will enlighten you with all the necessary information regarding this new rule.

About 5 Year Two-Wheeler Insurance & How It Works

A 5-year two-wheeler insurance policy is a long-term insurance plan that offers coverage for your bike for a duration of five years, providing a comprehensive shield against accidents, damages, and third-party liabilities. Unlike traditional annual policies, a 5-year insurance plan offers extended coverage and benefits at a fixed premium rate, which can help you save on renewal hassles and fluctuating costs. How It Works:

1. Premium Payment: The premium for the entire five-year period is paid upfront, offering a discount on the overall premium.
2. Comprehensive Coverage: It typically includes coverage for theft, natural disasters, fire, accidental damage, and third-party liabilities.
3. No Annual Renewals: The policy remains valid for five years, eliminating the need for annual renewals and ensuring continuous coverage without interruptions.
4. Discounts: Many insurers offer a discount for choosing a 5-year policy over shorter-term options, making it cost-effective in the long run.
5. Easy Documentation: The documents and formalities remain the same as regular policies, but with the added advantage of not having to re-submit documents for five years.

Which insurance is mandatory for Two-Wheeler?

Before moving on to this question, let us study the new changes in the insurance rules and regulations. As per IRDAI (Insurance Regulatory and Development Authority of India), if you buy a new two-wheeler, it is necessary for you to get a long term bike insurance policy. This rule has been in effect from September 2018. The term period of the long term insurance policy may vary based on the type of policy you are buying. For instance, if Gaurav has bought a new two-wheeler, he will have to buy a long term insurance policy for five years if he is opting for a third party insurance policy. On the other hand, if Gaurav’s sister buys a new scooty for herself, she has to buy the long term two wheeler insurance policy for three years if she is choosing the comprehensive policy cover. The answer to the question is 5 years insurance mandatory also varies based on the vehicle you are purchasing. For instance, if you are buying a new car, you are entitled to get three-year insurance instead of five.

Why is Bike Insurance Mandatory for 5 Years?

Roads can be really dangerous if you are not careful. If in any case, some mishap takes place, your insurance can help you cover the damages. But, some of us do not consider insurance a beneficial investment. To be honest, it is pretty crucial to have insurance. Moreover, the Motor Vehicle Law, 1988, mandates the riders to get an insurance policy. And as per new rules, it has also become necessary to buy a 5-year policy when you are buying a new two-wheeler. The question that surfaces here is, Why is 5 years insurance mandatory?

Here are Some Benefits of Buying 5-year Insurance for your Bike

Stress-free experience

The very first and best benefit of buying a long term insurance policy is the stress-free mind. With a 5-year third party cover or 3-year comprehensive cover, you will be free from the hassle of renewing the policy every year. It will save you a lot of time and most of all you don’t have to keep expiry dates in mind.

Pay lower premium

You also save a significant amount of money by buying a long term insurance plan for your vehicle. How? The one-time premium that you pay for a three or 5-year cover will be way less than the compiled annually paid premium amount for the same period.

Keep the NCB

NCB stands for No Claim Bonus. It is a discount that a rider gets on renewing his or her policy for making no claim in the past year. In case of an annual policy, if you have filed a claim, your no claim bonus will be Nil. On the other hand, if you have a long term policy and you make a claim. Your NCB will not hit zero. You can still avail some percentage of discount on your policy premium.

Get a Refund

Unlike the annual policy where there is no refund. The long term insurance plan provides you a refund in certain scenarios. For instance, if Gaurav loses his bike or it gets stolen, he can get a refund from his insurer if he has a long term policy. However, the refund amount (of the paid premium) will vary based on the time not utilised or the balance years of the policy.

Total Security

After all, you will be in safe hands when you have a long term insurance policy. It will cover all the damages based on its type if any mishappening occurs.

Types of 5-Year Two-Wheeler Insurance

1. Comprehensive 5-Year Insurance

Comprehensive 5-year insurance offers extensive coverage, including both own damage and third-party liabilities. It protects your bike from various risks like accidents, theft, fire, natural disasters, and damage caused to a third party. This policy provides the most complete coverage and ensures long-term protection for your bike, making it ideal for those who want extensive security over five years.

2. Third-Party 5-Year Insurance

A mandatory insurance policy, third-party insurance covers only damages or injuries caused to a third party in the event of an accident. It does not cover any damage to your own bike. While this option is more affordable, it provides limited protection, focusing solely on legal liabilities towards others. It's suitable for individuals seeking budget-friendly coverage without extra frills.

3. Standalone Own Damage (OD) 5-Year Insurance

Standalone Own Damage insurance covers only the damages to your bike, excluding third-party liability coverage. This policy is ideal for those who already have third-party insurance in place and want to protect their bike against accidents, theft, or other damages. It’s a cost-effective option for individuals who do not need full comprehensive coverage but still want to safeguard their vehicle.

4. Long-Term Insurance with Add-Ons

Long-term policies can be enhanced with additional benefits like zero depreciation cover, engine protection, roadside assistance, and personal accident cover. These add-ons allow customization of the policy to meet specific needs. Whether you're looking for extra protection against wear and tear or want a 24/7 emergency support feature, these add-ons make the policy more comprehensive and suited to your unique requirements.

Benefits of the 5-Year Bike Insurance Policy

1. Long-Term Coverage

A 5-year bike insurance policy provides continuous coverage for five years without the need for annual renewals. This long-term coverage ensures peace of mind, as you don't have to worry about renewing your policy each year.

2. Cost Savings

Purchasing a 5-year bike insurance policy often comes with a discount on premiums compared to renewing annually. Insurers offer attractive discounts for opting for long-term policies, making it a cost-effective choice.

3. Protection Against Price Hikes

By locking in your premium for five years, you avoid any potential increase in insurance costs over the years. This helps you save money in the long run, especially if premiums rise due to inflation or other factors.

4. Avoids Policy Lapses

A 5-year policy eliminates the risk of forgetting to renew your insurance each year. This ensures that your bike remains insured without any lapses in coverage, which is crucial for maintaining legal and financial protection.

5. Easier Paperwork

Renewing a bike insurance policy can often be cumbersome, involving repeated documentation. With a 5-year policy, you eliminate the need for yearly paperwork and administrative tasks, saving both time and effort.

6. Increased Convenience

A 5-year insurance policy offers convenience by reducing the frequency of renewals and minimizing the chances of missing out on coverage. It simplifies the process, offering more stability and certainty.

7. Comprehensive Coverage

A 5-year policy typically offers comprehensive coverage, including both own damage and third-party liability. This ensures that your bike is protected against a wide range of risks for an extended period.

How is NCB Calculated on a 5-Year Policy?

NCB (No Claim Bonus) is a reward provided by insurance companies to policyholders for not making any claims during a policy term. On a 5-year bike insurance policy, NCB is calculated as follows:

1. Eligibility for NCB: To be eligible for NCB on a 5-year policy, the policyholder must not file any claims during the entire term. If a claim is made, the NCB benefits for that year will be forfeited.
2. NCB Percentage: NCB increases with each claim-free year. Typically, NCB starts at 20% for the first claim-free year and increases up to 50% by the fifth claim-free year. The specific percentage may vary by insurer.
3. Calculation: The NCB percentage is applied to the own damage portion of the premium. For example, if you have a 50% NCB and your premium for the own damage coverage is ₹5,000, your discount would be ₹2,500 (50% of ₹5,000).
4. Portability: NCB can be transferred to a new insurer if you switch providers, but you need to provide proof of no claims during the previous policy term.
5. Effect on Renewal: On a 5-year policy, you can accumulate NCB each year. At the time of renewal or policy transfer, the accumulated NCB can reduce your premiums significantly, offering substantial savings.

NCB rewards claim-free behavior, and on a 5-year policy, this bonus can lead to significant discounts on future premiums, making it beneficial for long-term policyholders. Also Read: 9 Common Mistakes to Avoid When Renewing Bike Insurance

What Is The Impact Of Buying Long-Term Two-Wheeler Insurance?

Buying long-term two-wheeler insurance, such as a 3-year or 5-year policy, can have several impacts, both positive and negative. Here's how it affects you:

Positive Impacts

1. Lower Premiums: Often, long-term policies come with discounted premiums, which can be more cost-effective in the long run compared to annual renewals.
2. No Need for Annual Renewals: You won’t have to go through the renewal process every year, saving you time and effort.
3. No Claim Bonus (NCB) Benefits: Some insurers offer additional NCB for long-term policies, providing further premium reductions in the future.
4. Fixed Coverage for Multiple Years: Long-term policies lock in coverage for several years, ensuring you're always covered without worrying about policy changes or increases in premiums.

Negative Impacts

1. Inflexibility: If you want to switch insurers or adjust the coverage, you may find it difficult to do so before the policy term ends.
2. Upfront Payment: Long-term policies often require an upfront payment, which might strain your finances.
3. Policy Terms Can Change: Insurers can adjust their terms or premium rates for new policies, meaning you might be paying higher premiums in subsequent years if the insurer revises its pricing model.

Things to Check Before Opting for Five Year Two-Wheeler Insurance

1. Coverage Type: Ensure the policy provides the required coverage, including third-party liability, own damage, and theft protection.
2. No Claim Bonus (NCB): Confirm the eligibility for NCB and how it will be applied over the 5-year term, which can significantly lower premiums for subsequent renewals.
3. Insurer Reputation: Check the reputation of the insurance provider, their customer service, claim settlement process, and reviews to ensure reliable service.
4. Premium Rates: Compare premiums for a 5-year policy with annual plans. Sometimes, a 5-year plan can provide long-term savings, but it's essential to verify if it fits your budget.
5. Exclusions: Carefully read through the exclusions in the policy to ensure that you're not left unprotected in critical situations.
6. Add-ons: Look for optional add-ons such as roadside assistance, zero depreciation cover, or engine protection to enhance the coverage.
7. Renewal Terms: Understand the renewal process and terms, especially regarding NCB transfer, policy extension, and premium adjustments.
8. Claims Process: Ensure the insurer offers a hassle-free and transparent claims process, with provisions for cashless repairs at network garages.

Also Read: How To Check Bike Insurance Policy Status Online

FAQs

Is 3rd Party Insurance enough for a bike?

Yes, if you have 3rd party bike insurance, it’s great for your two wheeler. However, if you are buying a new vehicle, it is best to opt for a comprehensive package for at least 2-3 years.

Which insurance is mandatory for two-wheeler?

There are two types of policies, namely, third party and comprehensive. Although you can choose any of it for your bike, it is mandatory to have at least a third party insurance.

Is buying a 5-year policy mandatory for all types of bike insurance plans?

No, buying a 5-year policy is not mandatory. It's an optional choice for those who prefer long-term coverage and want to avail discounts. Annual or 3-year policies are still available.

Do I need to renew bike insurance every year if I buy a 5-year plan?

No, a 5-year policy provides coverage for five years, so no renewal is needed during this period. However, once the policy term expires, you’ll need to renew it for continued coverage.

How many years is bike insurance required?

Bike insurance is required by law for all bikes in India. While third-party bike insurance is mandatory for all, comprehensive coverage is recommended for additional protection. The insurance term can range from one year to five years.

How much does bike insurance renewal cost?

The cost of bike insurance renewal depends on the bike’s make, model, age, and coverage type. For a comprehensive policy, the renewal cost can range from ₹1,000 to ₹10,000 or more, depending on these factors.

Which bike insurance is mandatory?

Third-party bike insurance is mandatory as per Indian law. It covers liabilities arising from accidents, injuries, or damage caused to third parties. Comprehensive insurance is optional but recommended for broader coverage.

How many years can a two-wheeler be used?

A two-wheeler can be used for several years, with no fixed limit. However, the lifespan depends on maintenance, usage, and legal regulations regarding vehicle fitness. Typically, two-wheelers last up to 10-15 years, but this varies based on condition and model.   *Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.