Motorcycle or bike is the most common mode of a commute across the country. It is especially true in non-metro cities, small towns and villages that lack reliable and cost-effective public transport. Bikes are also leisure objects, and motorcycling is now a well-established sport in the country. Biking is popular among young people, many of whom prefer the thrill of riding a motorcycle over the dullness of a car ride.
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The thrill of a ride on a two-wheeler, however, comes at a higher risk of accident and injury to the rider, his bike and others on the road (third-party).
It makes bike insurance extremely important. Not surprisingly, bike insurance is mandatory in the country. Following a Supreme Court judgment, new two-wheelers are required to have a five-year insurance cover. The five-year mandate is however only for third-party insurance and doesn’t cover damage to the vehicle or the rider.
You need to buy proper bike insurance to cover your bike and yourself. The cover is available through the website of almost every insurance provider, which makes it easy to buy bike insurance online.
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Proper bike insurance will allow you to pay for the costly repair of your vehicle and also cover the medical expenses if you get injured in case of an accident.
But buying bike insurance can be tricky especially if it’s your first purchase. Keep these five points in mind and you will never be misguided by the bike dealer or the insurance agent.
1. Types of Insurance Policies.At present, the industry offers two types of bike insurance policies -- Third-Party liability policy and a Comprehensive Insurance policy. The third-party policy is mandatory under Motor Vehicle Act 1998 and it only covers damages or injuries caused to third-party such as pedestrians and other road users.
In contrast, a comprehensive policy covers the third-party damage as well as own damage to the bike and the rider in the event of an accident. Ask the bike dealer or the insurance agent to give you a quotation for both kinds of policies and then choose the right policy.
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Third-party insurance is cheaper in terms of premium but if you have a limited budget and live in a city then you should always buy a comprehensive policy.
This will give peace of mind and you won’t have to spend a big amount from your pocket on repairs and medical expenses in case of an accident.
2. The coverage of your policy. Before you pay for a new insurance policy for your bike it is important to understand the coverage of the policy that you have selected. Prepare a checklist and see what kind of damage to the bike and the rider the comprehensive bike insurance policy cover. This will make it much easier for you to file an insurance claim in the event of an accident.
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As a thumb rule, a comprehensive policy should cover theft, fire damage, damage from natural disasters like floods, water logging, earthquake and landslide among others, damage from man-made calamities like riots and vandalism, third-party damage, third-party legal liability and damage due to accidents caused by other road users.
3. Insured Declared Value (IDV) or value of your bike.The insurance premium and claim settlement in case of complete loss of the vehicle is based on the current market value of your bike. In the industry parlance, it is called Insured Declared Value (IDV). You need to set the IDV of your bike while buying an insurance policy.
In the case of new bikes, IDV is closer to the ex-showroom price that you have paid for the vehicle and in the case of older bikes it approximates the current market value of the vehicles.
As a thumb rule, the higher the IDV, the higher the premium you will have to pay to insure it.
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4. The cubic capacity (CC) of your bike.The Cubic Capacity (CC) or the size of the engine fitted on your bike or motorcycle is a key factor in determining the insurance premium. The cubic capacity refers to the volume of the combustion chamber of the vehicle’s engine. A bike with higher CC will have a bigger and more powerful engine and the higher the CC, the more the insurance premium.
The insurance regulator IRDAI had defined seven slabs for bikes with different engine sizes starting with the smallest engine capacity of 75cc or less and monster bikes with engines of 1500cc or more.
According to IRDAI third-party premium is Rs 482 for 75cc or smaller bikes and rises to Rs 7890 for a bike with a 1500cc or bigger engine.
While the third-party insurance rates are standard across all insurance companies, the premium for comprehensive plans varies depending on the coverage and difference in the own damage component.
5. Policy Exclusions.Good comprehensive bike insurance will cover most of the own damages but the insurance company may not be willing to cover all risks. These are called policy exclusions and you should be aware of the situations under which you cannot make a claim.
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The list of exclusions is generally listed in the policy document but it is best to go through a checklist.
Generally speaking, insurance companies exclude the following from the policy -- mechanical or electrical breakdown, regular wear and tear, accident when riding a two-wheeler while under the influence of an intoxicating substance, damage when occurring outside the geographical limits, damage due to nuclear reactions and any other situation mentioned in the policy document as an exclusion.
Keep these things in mind and you will always buy the right insurance cover for your bike. Happy Biking!
(Karan Deo Sharma is a Mumbai-based finance and equity markets specialist).
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