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Understanding Period of Liability Cover in Bike Insurance

Writer: Eshaan Sanjay Patil

I am a film maker and journalist by profession. I have worked as a Production Manager before I completed my PGDM in Film Making.

See article by Eshaan Sanjay Patil

India, 16 Sep 2024 8:07 AM GMT

Creatives : Eshaan Sanjay Patil

I am a film maker and journalist by profession. I have worked as a Production Manager before I completed my PGDM in Film Making.

See article by Eshaan Sanjay Patil

Third-party Liability Cover is a Legal Requirement for All Bike Owners.

Third-party liability cover is a legal requirement for all bike owners. It is crucial to safeguard yourself against financial loss arising from having to compensate third parties for their injuries and damages to their properties caused by your two-wheeler. So, it is always necessary to have valid third-party liability insurance while on the road. The validity period of the cover varies depending on whether you obtain it for a new bike or are renewing the existing one.

This blog details the validity period of third-party bike insurance and the benefits of the cover.

Third-Party Liability Insurance

The Insurance Regulatory and Development Authority of India (IRDAI) has made it mandatory to have 5-year third-party liability cover for new bikes. This is to ensure a maximum of two-wheelers plying on the road are insured. However, you need to purchase only a 1-year third-party insurance when you buy a used bike or renew the policy for an existing one. Understanding the validity period of third-party bike insurance is essential for renewing it on time and avoiding legal consequences.

1. Third-Party Liability Insurance

It covers damages or injuries caused to third parties due to accidents involving the insured bike for one year. You have to renew it every year to maintain continuous coverage.

2. Standalone Long-Term Third-Party Insurance

This plan covers third-party liability for five years for new two-wheelers. It ensures the bike owner is protected against financial obligations for injuries or death of third parties and damage to their properties due to accidents caused by the insured bike. It offers continuous protection for five years without the need for annual renewal, reducing administrative burdens and ensuring compliance with the law.

3. Third-party Liability Cover in Long Term Comprehensive Bike Insurance

Long-term comprehensiver bike insurance for new two-wheelers combines third-party liability coverage with own damage protection. The validity of both the components is 5 years. Thus, with this long-term comprehensive insurance, new bikes will get a third party liability cover for an extended period.

4. Third Party Liability Cover in Bundled Insurance Policy

A bundled insurance policy for new bikes includes a 5-year third-party cover and a 1-year own-damage cover.

Why is Third Party Liability Insurance Mandatory for 5 Years for New Bikes?

Two-wheeler insurance in India has undergone significant changes in recent years. The IRDAI mandates a five-year period for third-party liability coverage to ensure better compliance and comprehensive protection for bike owners. This rule, effective from August 1, 2020, was introduced to address the high number of uninsured two-wheelers on the road. The primary goal is to reduce the risk of financial losses due to accidents and ensure that all bikes are adequately covered.

Here’s a closer look at why this mandate is crucial:

1. Enhanced Compliance

The five-year insurance policy mandate is designed to boost compliance rates among bike owners. By making long-term insurance coverage compulsory, IRDAI aims to reduce the number of uninsured bikes on the road. This extended coverage period ensures that more vehicles are properly insured, promoting greater adherence to legal requirements and overall road safety.

2. Financial Protection

One of the primary reasons for a five-year policy is the enhanced financial protection it offers third parties. In the event of an accident caused by the insured vehicle, this extended coverage will provide compensation for damages and injuries sustained. This not only protects the insured but also ensures that victims receive adequate financial support, fostering a fairer and more responsible insurance environment.

3. Reduced Policy Renewals

A longer policy duration reduces the frequency of renewals, which can be both time-consuming and cumbersome for policyholders. With a five-year mandate, bike owners benefit from uninterrupted coverage, eliminating the need for annual renewals and reducing administrative burdens. This continuous coverage provides peace of mind, knowing that insurance needs are consistently met without the hassle of frequent renewals.

What Are the Benefits Offered by the 5-Year Two-Wheeler Insurance Policy?

Opting for a five-year insurance policy offers numerous advantages that make it an appealing choice for many riders:

1. Lower Premiums

Long-term policies often come with lower annual premiums compared to shorter-term plans. This means that by committing to a five-year policy, you benefit from reduced overall costs, making it a cost-effective option in the long run. The lower premiums can result in significant savings over the policy’s duration.

2. High NCB

A longer claim-free period can significantly increase your No Claim Bonus (NCB) discount. This discount is applied to your Own Damage (OD) premium, leading to substantial savings. By maintaining a clean record over five years, you can enjoy considerable reductions on future premiums, rewarding you for safe riding.

3. No Insurance Challans

A five-year policy eliminates the risk of facing penalties or fines for riding an uninsured bike. Continuous coverage ensures that you remain compliant with legal requirements, avoiding insurance-related challans and the associated inconvenience.

4. Continuous Protection

With a five-year policy, you receive uninterrupted coverage, which is crucial for safeguarding against unexpected damages or liabilities. This continuous protection provides peace of mind, knowing that you are consistently covered without the need for frequent renewals.

Things to Check Before Opting for Two-Wheeler Insurance

Before purchasing a two-wheeler insurance policy, consider the following:

Insurance Requirements: Assess your needs based on the bike’s age, engine capacity, location, and usage frequency.
Risk Profile and Driving Habits: Choose coverage that matches your risk profile. For high-risk riders, additional add-ons like Zero Depreciation can be beneficial.
Budget: Consider your budget while selecting the Insured Declared Value (IDV) and add-ons.
Deductibles: Opt for voluntary deductibles to lower your premium, understanding that you will bear a portion of the claim amount.
Buying Method: Online insurance is often cheaper and more convenient compared to offline methods. However, ensure the insurer is reputable and offers good after-sales services.

Conclusion

The validity period of third-party liability cover depends on whether you are buying it for a new bike, a used two-wheeler or renewing the policy for an existing one. By understanding the period in each case and selecting the right type of insurance, you can ensure that your bike is adequately protected against potential risks and liabilities.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

Contributors Suggest Correction

Writer : Eshaan Sanjay Patil

Editor : Anurag Mazumdar

Creatives : Eshaan Sanjay Patil

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