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IRDA Rules for 5 Year Bike Insurance Plans

By Finserv MARKETS - Feb 4,2019
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IRDA Rule for 5 Year Bike Insurance Plan

According to various surveys conducted by research agencies, more than 60% of two-wheelers on the roads are uninsured in India. Consequently, when mishaps occur, the uninsured vehicle owners are often unable to compensate for the damages caused. In view of this unfortunate situation, in the country, the Insurance Regulatory and Development Authority (IRDA), announced that all new two-wheelers will need to have a mandatory five-year third-party insurance from September 1, 2018, onwards. This decision of the IRDA was implemented in line with the recent decision taken by the Supreme Court in this regard.

The IRDA is the regulatory body that oversees all insurance activities in India. On the other hand, a third party insurance policy covers the damages caused by the vehicle owner to a third party (a person or property) in case of an accident. Third party insurance is mandatory in India under the New Motor Vehicle Act of 2019. Moreover, as per the IRDA rules, two wheeler insurance cover for 5 years must be included in the cost of sale. Hence, if you are planning to buy a bike anytime soon, getting it insured will cost you almost double of what it used to previously. Here’s how the bike insurance plans will be affected by the 5 Year third-party insurance rule by IRDA: –

  • If you are buying a two-wheeler with engine displacement up to 75cc, you will need to pay a premium of INR 1,045 for the next five years, instead of INR 427 per year.
  • If you are buying a two-wheeler with engine displacement between 75cc and 150cc, you will need to pay a premium of INR 3,286 for the next five years, instead of INR 720 per year.
  • If you are buying a two-wheeler with engine displacement between 150cc and 350cc, you need to pay a premium of INR 5,453 for the next five years, instead of INR 985 per year.
  • If you are buying a two-wheeler with engine displacement larger than 350cc, you will need to pay a premium of INR 13,304 for the next five years, instead of INR 2,323 per year.

Although buying a bike insurance online for the long term may cost you more initially, as a vehicle owner, it reduces the hassle of yearly policy renewals. Once you have made the payment, you can enjoy uninterrupted insurance protection for another 5 years. Moreover, when you consider the cost of bike insurance over the last 5 years, you will notice that the cost of insurance has nearly doubled. Hence, when you opt for long term two wheeler insurance, you will also end up saving costs against inflation.

However, if you want complete protection against risks, buying a comprehensive insurance policy along with third-party liability cover is highly recommended. At Finserv MARKETS, read the difference between third party and comprehensive insurance with their respective coverages and premium amounts.

Read our top blogs to know more about two wheeler insurance in India:

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522