KYC Norms in Two-Wheeler Insurance

When it comes to bike insurance, Know Your Customer (KYC) norms play a significant role in the application and renewal process. From January 2023 onwards, the Insurance Regulatory and Development Authority of India (IRDAI) has mandated that all insurance companies must verify the identity of policyholders to prevent fraud and ensure transparency in transactions. As a policy buyer, you must abide by the KYC norms when buying a bike insurance policy. Since this is a relatively recent amendment, you may have some queries and doubts regarding the KYC norms you may have to follow. To help you and other potential policyholders, we take an in-depth look at KYC norms in bike insurance and understand the importance of complying with them.

What is KYC in Bike Insurance?

Know Your Customer (KYC) for bike insurance is a process designed to verify the identity of policyholders. It requires providing personal information and valid identity documents. This process ensures insurance companies issue policies to legitimate individuals and helps prevent fraudulent activities. When you apply for bike insurance, the insurer will ask for KYC documentation to confirm your identity and address.

Why is KYC Mandatory for Two Wheeler Insurance?

KYC is mandatory for insurance to maintain a secure and transparent environment. By verifying the identity of policyholders, insurers can prevent fraudulent claims and ensure that policies are issued to genuine individuals. This requirement also enhances the credibility of the insurance industry, as it demonstrates a commitment to honesty and integrity.

Documents Required for KYC

You must submit specific documents to verify your identity and address to comply with KYC for bike insurance. Typically, you will need to provide:

1. Identity proof: Acceptable documents include an Aadhaar card, PAN card, passport, voter ID, or driving license.
2. Address proof: This could be a utility bill, passport, bank statement, or driving licence with your current address.
3. Passport-sized photograph: A recent photo to confirm your identity visually.

What are the Benefits of KYC in Bike Insurance?

1. Prevention of Fraud

KYC ensures that bike insurance policies are issued only to genuine individuals, reducing the chances of fraudulent claims and unethical practices.

2. Building Credibility

By completing KYC verification, policyholders establish trust with their insurance providers, fostering a reliable relationship.

3. Simplified Processes

KYC streamlines the application, renewal, and claim processes, making it faster and more efficient for both insurers and customers.

4. Enhanced Transparency

Ensures a secure and transparent environment in the insurance sector, benefiting all stakeholders.

5. Accurate Documentation

Helps insurance companies maintain accurate customer records, which is essential for claim settlements and resolving disputes.

6. Quick Dispute Resolution

Proper KYC documentation facilitates faster handling of disputes or claims, saving time and effort.

7. Regulatory Compliance

Adhering to KYC norms ensures compliance with legal and regulatory requirements, safeguarding the interests of both policyholders and insurers.

8. Personalized Services

Insurers can offer customized policies and benefits based on accurate customer information obtained

KYC Norms for Insurers

The introduction of KYC has established essential norms for individuals and juridical entities regarding bike insurance policies:

New KYC Norms for Individuals

1. Insurers must verify the personal details of policyholders to ensure the authenticity of policies.
2. If submitting a different address from the one on your Aadhaar card, a self-declaration must be signed.
3. Required documents include proof of residence, proof of identity, and a passport-size photograph.
4. For long-term third-party bike insurance, the timeline for completing KYC depends on risk profiles:
5. Low-risk profiles: within 2 years.
6. High-risk profiles: within 1 year.
7. Individuals unable to complete KYC earlier must submit all necessary documents to their insurer.

New KYC Norms for Juridical Entities

1. Submit the company's name, proof of existence, and legal form.
2. Provide identification proof of the juridical person.
3. Submit proof of address for the registered location.
4. Provide documents showing the corporation's regulatory authority.
5. Identify and authorize an individual to act on behalf of the juridical entity.

What are the Steps and Procedures for KYC Validation?

The steps for bike insurance KYC validation are straightforward. Here's what you need to do:

1. Submit the necessary documents: Provide valid identity, address proof, and a passport-sized photograph.
2. Keep documents updated: If there are changes in your address or contact details, inform the insurer immediately.
3. Renew on time: Ensure timely bike insurance policy renewal to avoid complications.

How To Comply with KYC Norms For Bike Insurance?

Complying with KYC norms for bike insurance is simple and straightforward. Here's what you need to do:

Submit the necessary documents

Provide the required KYC documents to your insurance provider. Make sure that the documents are accurate, up-to-date, and valid.

Keep the documents handy

Keep a copy of the KYC documents with you at all times, as they may be required in case of an accident or mishap.

Update the documents

If there are any changes in the KYC documents, such as a change in address or phone number, inform the insurance provider immediately and provide the updated documents.

Renew timely

Ensure that your two-wheeler insurance renewal is carried out on time and provide updated KYC documents if necessary.

Different Ways of Following KYC Norms for Individuals

There are various methods of KYC that vehicle insurance companies use to verify the identity of individual policyholders. Let's explore them in detail.

Aadhaar-based KYC

Aadhaar-based KYC is a simple and hassle-free process that involves linking the Aadhaar number with the bike insurance policy. The policyholder can provide their Aadhaar number and authenticate it through an OTP sent to their registered mobile number.

Physical KYC

This is a traditional method of KYC that involves the policyholder visiting the insurance company's branch office or a designated location to provide their identity proof and other documents. The insurance company verifies the documents and completes the KYC process.

OTP-based KYC

OTP-based KYC is a simple and convenient method that involves the policyholder providing their mobile number and verifying it through an OTP sent to their registered mobile number. The insurance company verifies the mobile number and completes the KYC process.

What Happens If You Fail to Comply with KYC Norms?

If a policyholder fails to comply with KYC norms, the insurance company may reject the application or delay the renewal process. In case of a claim, the insurer may reject it if the policyholder has not complied with KYC norms. The IRDAI has mandated KYC norms, and as a responsible bike owner and policyholder, it is your duty to engage in due compliance.

Conclusion

Following KYC norms in vehicle insurance is essential to prevent fraudulent claims and ensure that the policy is issued to genuine individuals. By complying with KYC requirements, policyholders can establish their credibility and enhance the trust between them and the insurance provider. It is important to keep the KYC documents accurate, up-to-date, and valid to ensure a smooth application and renewal process. By following these simple steps, policyholders can ensure that they comply with KYC norms and enjoy hassle-free bike insurance coverage.

Frequently Answered Questions

1. What is KYC? 

KYC stands for Know Your Customer. It is a process used by insurance companies to verify the identity of policyholders.

2. Is it compulsory to do KYC?

Yes, KYC is compulsory for all insurance policies, including bike insurance. The Insurance Regulatory and Development Authority of India (IRDAI) mandates that all insurance companies complete KYC verification for new policies and renewals to prevent fraud and ensure transaction transparency.

3. Can I do KYC at home? What kinds of KYC verification are accepted for my insurance policy? 

Yes, you can do KYC at home through various methods. Insurers offer Aadhaar-based KYC and OTP-based KYC, allowing you to complete the process without visiting a physical office. You can use identity proofs like Aadhaar, PAN card, and passport, and address proofs like utility bills and bank statements for verification.

4. What if my name as per VAHAN and the name on my PAN card are not the same? 

If the name on your VAHAN registration differs from that on your PAN card, you should correct the discrepancy. Contact the relevant authorities to update your details and ensure consistency in your KYC documents to avoid delays or complications.

5. Is KYC only required if I (the insured) purchase directly? What if I take it through an agent or aggregator? 

KYC is required whether you purchase insurance directly, through an agent, or via an aggregator. All policyholders must comply with KYC norms as mandated by the IRDAI. Agents and aggregators may assist in guiding you through the KYC process, but the requirement for verification applies in all cases.

6. I don't have a PAN card or Aadhaar. Can I still do KYC? 

If you don't have a PAN card or Aadhaar, you can still complete KYC using alternative identity and address proofs. Accepted documents include a passport, voter ID, or driving licence for identity verification and utility bills or bank statements for address verification.

7. If there are more people covered in the policy, who all are required to do KYC verification? 

If multiple people are covered under a single bike insurance policy, KYC verification is typically required only for the primary policyholder. However, if additional policyholders are included, you may need to provide KYC documents for each person.

8. If I have multiple address details in my documents, for example, the residing address is different from the ID address, how will KYC happen? 

If your address differs between documents, ensure that your KYC address proof matches your current address. You can use utility bills, rental agreements, or bank statements as address proof. If you have multiple addresses, provide the most current one and notify your insurer about any discrepancies to avoid complications. * Standard T&C Apply ** Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.