How does a two wheeler insurance policy work?

Indians love their two-wheelers and the fact that we are the largest manufacturer of two-wheelers in the world proves it. But we have this strange inclination to not follow rules such as wearing helmets, waiting for traffic lights and buying insurance. Though driving a two-wheeler without insurance is a punishable offence, close to 70% two-wheelers on Indian roads are without proper two wheeler insurance

When you buy a two-wheeler from a dealer, it comes with comprehensive two-wheeler insurance for 1 year and third-party liability coverage for 5 years, provided you bought your bike or scooter after August 29, 2018. That was when the IRDA made it mandatory for general insurance companies to sell five-year, third party insurance cover for new two-wheelers.

How does two-wheeler insurance work?

Two wheeler insurance is of two types and the coverage depends upon which type you buy.

Third-party insurance: Third-party two-wheeler insurance is the bare minimum required to comply with the law of the land. You should have at least third party insurance to ply on the road. Third party bike insurance covers the damage suffered by others if you meet with an accident on your two-wheelers. For example, if someone suffers from a fatal or non-fatal injury or their property is damaged, your third-party insurance will cover their damages but not yours. This insurance will not cover damages received by your bike or scooter.

However, third-party liability coverage provides protection for personal accidents leading to partial or total disability or death of the insured. The percentage of sum insured depends upon the severity of the accident.

EVENT

% OF SUM INSURED

Death

100%

Dismemberment of both limbs

100%

Loss of sight of both eyes

100%

Loss of one limb and one eye

100%

Dismemberment of one limb or loss of one eye

50%

Permanent and total disability

100%

You can buy third-party bike insurance online and it costs comparatively lesser than comprehensive two wheeler insurance policy.

Comprehensive two wheeler insurance policy: A comprehensive bike insurance policy provides third-party liability coverage as well as financial protection against damage to your bike or scooter in the event of an accident or theft. It also offers protection to your two-wheeler against fire, vandalism, terrorism, riots and natural calamities. Before you buy bike insurance online, check the policy document carefully for inclusions and exclusions.

Your comprehensive two-wheeler insurance covers the following:

Natural calamities: Natural calamities and events include floods, storms, cyclones, fire, earthquake, landslides, lightning, frost or snow, wildfires and self-ignitions.

Man-made calamities: A man-made calamity is defined as something which is not an Act of God but an event where a human being is directly or indirectly responsible for causing that act. Examples include thefts, accidents, collisions, vandalism, damage in transit, etc.

Personal accidents: Personal accidents include an accident that causes death or partial or total disability. In some policies, you also get pillion rider or co-passenger cover, or you can buy add-ons.

Role of insured declared value (IDV) in your two wheeler insurance policy

Insured declared value (IDV) or the current value of your bike is one of the components that is taken into account while computing premium for comprehensive two wheeler insurance policies. This is not applicable for third-party bike insurance where the premium is calculated on the basis of the vehicle category.

Many people consider going for a lower IDV when they buy bike insurance online to bring down the premium, especially now since personal accident cover of Rs.15 lakh and 5-year third party insurance is mandatory. However, when you raise a claim after an accident, you will receive a lower claim amount because of the low IDV. Also, in case of theft, you will be compensated according to the IDV that you have quoted which will be lower than the present market value of your vehicle.

Role of depreciation in calculating claim value

When you make a claim after an accident, the claim amount will be dependent on the value of your vehicle minus depreciation. The below table explains how depreciation is factored into the calculation according to the age of your vehicle:

PERIOD

PERCENTAGE

6 months

5%

6-12 months

15%

1-2 years

20%

2-3 years

30%

3-4 years

40%

4-5 years

50%

Depreciation plays an important role in calculating the claim value. But if you want to get maximum value for the damages incurred by your vehicle without taking depreciation into account, you can go for a zero depreciation two wheeler insurance policy. It will mean paying extra for the annual insurance premium but you get the maximum compensation for your claim in case of damage.

These are some of the major things that determine how a two-wheeler insurance policy works. However, there are other factors too that we have to take into consideration and require a detailed analysis. When buying Bajaj Allianz Bike Insurance online carefully read about the inclusions, exclusions and benefits offered by your insurer.