Whether you live in a city or in the countryside, a two-wheeler is something that you invest in at some point in life. It is an economic vehicle which you can ride easily through narrow roads, but there are a few things like mandatory insurance that you must keep in mind to ensure a stress-free ride. The Motor Vehicles Act of India has made it compulsory for every two-wheeler owner to get a valid insurance cover. So, make sure you get the right cover for your two-wheeler before you start riding on the roads.
However, the statistics say a different story. According to the latest figures, out of all the motorbikes on the roads, only 30% are covered by motor insurance. A prime reason behind this is that the insurance sold to the buyers for a new vehicle is usually valid for one year and if not renewed by the owner automatically lapses. In the wake of this scenario, Insurance Regulatory and Development Authority of India (Irdai) allowed insurers to launch a long-term two-wheeler insurance policy which lasts for two to three years depending on the plan you choose.
Now, this leads to another important question—when it comes to two-wheelers, should one buy a long-term policy or just a one-year policy? If you are going through a similar dilemma, here are some scenarios to help you clear the clutter.
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Scenario 1: A newly purchased two–wheeler
If you have purchased a bike recently, then it is quite possible that the dealer has sold you a one-year policy for your vehicle. The chances are high on such policy sales because not many channels/dealers have moved towards long-term policies. Probably a part of it is because the person purchasing the bike looks at the on-road price and the dealer has to keep it low at all times.
Buying long-term vehicle insurance has many benefits. It will not only save up to 27% on your own-damage premium but will also free you from the hassle of renewing your policy every year. For example, for a Bajaj Pulsar 150 (electric start) registered in 2016, the premium for one-year comprehensive policy is Rs 1,489 and premium for the three-year long-term comprehensive policy is Rs 4,017. Hence, you should make a mature decision by exploring more options available in the market before you buy insurance.
Scenario 2: An old two-wheeler
There is no denying that many of us often keep a motorcycle for a long period, sometimes for more than 15 years also. Renewing your insurance policy is very economical as the IDV gets very low and so does the premium, and going for a one-year insurance policy is the only choice you will be left with. The reason behind this is that most of the insurers do not sell long-term insurance policy once the bike is more than 10 years old.
Insurers like New India Assurance only provide long-term insurance cover with zero-depreciation add-on for the first three years and without zero-depreciation add-on for six years. Hence, if you have an old bike opting for a standard one-year policy is the only option you are left with.
Scenario 3: Planning to sell bike
Plans to sell an old bike would usually mean that you need insurance only for a couple of months because once you sell it, the insurance will either be ported to the new owner or the new owner will have to buy a new insurance policy as per his/her needs. In such a situation, buying a single year policy is best and it also saves the money you would spend on buying a long-term policy.
Insurance is something that can be of great help when purchased thoughtfully. Hence, it is very important for you to analyse your needs before buying it. After all, it should fit your needs, not just for the short term but for a longer period too.
The writer is co-founder and director, Policybazaar.com