Why It Makes Sense To Buy A Long-Term Bike Insurance Policy In India?

Does renewing your two-wheeler insurance policy every year seem to be a tedious task? If it is the case, then you should go with a long-term bike insurance, which covers your vehicle continuously for three years as against the regular policy of one year only. In 2015, the Insurance Regulatory and Development Authority of India (IRDAI) allowed insurers to launch two-wheeler policies for the tenure of up to three years to popularize the two-wheeler insurance between motor vehicle owners.

Before we discuss the benefits of long-term motor insurance policies, let’s first understand how it is different from a one-year bike insurance policy.

One-Year Bike Insurance Policy Long Term Bike Insurance Policy
Policy certificate is valid for 1-year Policy certificate is valid for three years
Needs to renew annually No need to renew for up to three years
No NCB benefit is given even in case of single claim NCB is given for one or more claims, as per the policy
Premium changes as per the regulator’s hike Premium rates remain fixed

 

Now, as you know the difference, let’s discuss the benefits of long-term bike insurance:

  1. Convenience: Long-term insurance policy saves you from the hassles of renewing it every year. It is a daunting task to remember the premium due date, especially if someone owns more than two policies. Even if someone remembers the premium due date, he/she might fail to renew the policy due to lack of time or some other reasons. However, this can be taken care of by opting for the long-term two-wheeler insurance. With the help of this policy, you can keep your vehicle insured without renewing your policy every year.
  2. No inspection of the vehicle: In case you fail to renew your policy, you have to go through endless ordeals to get the coverage. Some insurers may insist on vehicle inspection before issuing the policy. However, with long-term insurance policies, you are insured for a long time without vehicle inspection and there is seldom a gap in the policy coverage.
  3. Avoid losses related to non-renewal of the policy: The policyholder is exposed to various risks in the case of non-renewal of the policy. For instance, if the vehicle meets with an accident when the policy lapses, the complete loss has to be borne by the policyholder However, a long-term insurance policy safeguards your vehicle continuously for three years.
  4. Attractive discount on own damage premium: Various insurance companies offer discounts on the own damage part of the long-term two-wheeler policy. As long-term policies cut administrative costs, these savings are passed on to the customer in the form of low premium rates.
  5. Premium rates are locked for three years: As IRDAI fixes third party premium rates, the authority increases tariffs by 10-15% per annum on an average. However, long-term insurance policies save policyholders from an annual hike in the third premium rate. Recently, the regulator has increased premium rates by 40%.
  6. Benefit of no claim bonus: In motor insurance, no claim bonus (NCB) is the insurer’s reward to the policyholder for not making a single claim in the policy year. When you choose a yearly renewal policy, you lose the No Claim Bonus (NCB) in case you make a single claim. However, with a long-term policy, you will not only get NCB benefit even if a claim is made but also get a higher NCB, as per the policy wordings.

 

NCB structure for 1-year policies NCB Earned
At the end of one claim-free year 20%
At the end of two consecutive claim-free years 25%
At the end of three consecutive claim-free years 35%
At the end of four consecutive claim-free years 45%
At the end of five consecutive claim-free years 50%
NCB structure for two-year long term policies NCB Earned
At the end of two claim-free years 30%
In case of one claim during the two-year policy 20%
In case of more than one claim during the two-year policy Nil
NCB structure for three-year long-term policies NCB Earned
At the end of three claim-free years 40%
In case of a claim during three-year policy 30%
In case of two claims during three-year policy 20%
In case of more than two claims during the three-year policy Nil

 

Rising popularity of long-term motorcycle insurance

Recently, ICICI Lombard’s long term two-wheeler insurance crossed the five lakhs policies mark. On this occasion, the company conducted a survey which revealed the following interesting preferences:

  • Four out of five customers were interested in buying longer insurance covers in other segments like health and car insurance
  • 80% customers were interested in renewing their policy due to its long duration feature
  • 51% wanted to purchase long-term insurance policy when their current policy expires
  • One out of four wanted a two-wheeler insurance for a longer duration of four or five years

Conclusion

Nearly 75% of two-wheeler running on Indian roads are uninsured. Although it is mandatory to have an insurance policy for the vehicle to ply on the road, most of the vehicle owners run their vehicle on roads without insurance coverage.  Long-term bike insurance policies are emerging as a way out for the insurance sector from the bane of uninsured two-wheeler plying on Indian roads.

For vehicle owners also, long-term policies are proving useful. Not only it keeps you away from the hassles of annual renewal, but it also secures the lives of other people. In the case of an accident, it is the responsibility of a vehicle owner to pay the compensation to the third-party. However, in case he doesn’t have the insurance coverage and capacity to pay compensation, the victim becomes helpless. But, if the vehicle owner has a policy, the insurer settles the claim. In this way, long-term two-wheeler insurance is a win-win situation for all.

 

Image Source: Turtlemint

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