Two-Wheeler Insurance And Its Types

03 June 2019

Two-wheeler insurance in India is governed by the Motor Vehicles Act, 1988 and the Insurance Companies and the policies issued by them are regulated by the Insurance Regulatory Development Authority of India (IRDAI). Two-wheeler insurance is motor insurance which is categorized under General Insurance.

Consequent to the directive of the Supreme Court of India, effective from 1st September 2018, all General Insurance Companies are required to issue a five-year third party (TP) insurance cover for new two-wheelers. Vehicles running on roads in the country without a valid insurance policy are liable to attract heavy penalties. Hence, every owner of a two-wheeler is required to hold at least a mandatory third-party liability insurance cover, which is the minimum coverage for two-wheelers.

Two-wheeler insurance policies are broadly classified into two types viz., (i) Third Party Liability Insurance policy coverage and (ii) Comprehensive Policy coverage, also known as Comprehensive Package Policy. Let’s decode these jargons now.

Third Party Liability Insurance Coverage Policy

It is called 'third-party' insurance since the beneficiary of the policy is someone other than the Insurer ( the Insurance Company) and the insured (generally, the vehicle owner). It’s very important to note that this policy does not provide any benefit to the insured, but covers the legal liability on the part of Insured Person, towards the death/disability caused to the third-party or loss or damage caused by the insured vehicle to the property of the third-party property. Further, this policy also provides personal accident cover for the bike owner. Loss or damage or theft of the insured two-wheeler is NOT covered under this policy. Some important points to be borne in mind while taking Third-party Liability Insurance cover are:

• The Sum Insured (SI) for Third Party cover with effect from September 2018, has been increased to INR 15 lakhs for all the vehicles. Earlier, Sum Insured value for two-wheelers was only Rs. 1 lakh.
• A person owning more than one vehicle needs to pay the premium amount for Personal Accident cover for only one vehicle. This premium paid covers for providing compensation in case any of the insured vehicles owned by the rider, meets with an accident causing death or permanent disability of the rider.
• The Third-Party liability insurance for New two-wheeler insurance policies is for a mandatory period of 5 years. But the Personal Accident Cover for owner-driver can be either 1 or more years, with the maximum limit of 5 years.

To conclude, it may be said that it is usually hassle-free to procure third party two-wheeler insurance and requires minimum documentation. But, it is also true that a Third-Party Liability Policy covers only the injuries/death to the other party involved in the accident as well as their vehicle damages. However, this type of insurance does not protect you in case of accidents. For that, you need to buy a Comprehensive Two-Wheeler Insurance Plan.

Comprehensive Insurance Policy

Comprehensive Two Wheeler Insurance provides complete cover for the two-wheeler and the insured. In other words, the comprehensive plan covers the third party liability as well as your injuries and vehicle damage or theft. Many other add-ons and optional covers are also offered by some Insurance companies, such as zero depreciation coverages, which covers even the cost of consumables. Therefore, in a nutshell, under a comprehensive two wheeler insurance policy, the vehicle will be covered against theft, loss, and damage. Further, it also offers personal accidental cover for the owner or rider in event of an accident. In addition, this type of two-wheeler insurance also covers you in the case of third-party liability.

Normally the cover of comprehensive insurance for two-wheelers is on an annual basis, which means that these are renewable every year. But if you wish to get rid of the trouble of renewal every year, you can opt for a long term two-wheeler insurance cover.

The key benefits of Long Term insurance are :-

• Premium Rate Hike Protection
• No claim benefit (NCB), if you ride safely and do not claim damages during the policy period.
• Longer coverage

Liberty General Insurance offers comprehensive two-wheeler insurance policies. To avail one, click here.