When it comes to buying a two-wheeler, a lot of facets are weighed and compared before settling on one. Some compare the mileage while others are more concerned about the looks. For some affordability and practicality are important while others spend a fortune on premium bikes that reflect stature. Whatever the facet, buying a two-wheeler involves buying a two-wheeler insurance policy as well. While you try and avoid life insurance, you cannot do the same with a two-wheeler insurance policy as it is mandatory as per the Motor Vehicles Act, 1988. A two-wheeler insurance policy is much like motor insurance. The law makes it necessary to have a ‘third-party’ insurance cover. A third-party liability cover however is meant to pay the damages to a third person involved in an accident involved with your vehicle. This means it does not cover the damages to your two-wheeler or personal damages.
You might know your two-wheeler inside out but do you also possess the same knowledge about your vehicle’s insurance policy? If not, read on –
A two-wheeler insurance policy has lots of aspects that you should have knowledge of. Let us see what they are –
- The type of cover – law mandates that your two-wheeler must have a ‘third-party liability cover which would compensate any person or property damaged through your two-wheeler. While this policy is mandatory, it does not cover your vehicle or yourself against any damages. For covering own damage a comprehensive policy is available which would also cover any damage sustained to the bike along with the mandatory third-party cover.
- The premium factor – premium for your bike depends on a lot of factors which include:
- The make and model of the bike
- The engine capacity
- City of registration
- Type of cover taken (Third Party or Comprehensive)
It is understandable that a premium bike costs more and so does the premium to get insured, higher the engine capacity higher will be your premium, premium in different cities is different and a third-party policy has limited coverage and so a lower premium as compared to a comprehensive one.
- Insured Declared Value – Do make special note of the term ‘IDV’ mentioned in the policy paper. The Insured Declared Value or IDV of your vehicle is calculated by adjusting the market value of your bike against the depreciation. There is a specific table of depreciation for easier calculations. As the bike ages, depreciation increases, and the premiums fall. The IDV is the effective value of the vehicle which is payable if the vehicle is completely damaged or lost.
| Age of the Vehicle | Percentage of depreciation for fixing IDV |
| Not exceeding 6 months | 5% |
| Exceeding 6 months but not exceeding 1 year | 15 |
| Exceeding 1 year but not exceeding 2 years | 20 |
| Exceeding 2 years but not exceeding 3 years | 30 |
| Exceeding 3 years but not exceeding 4 years | 40 |
| Exceeding 4 years but not exceeding 5 years | 50 |
- Additional Covers – while a comprehensive policy covers your vehicle’s damages, certain additional covers are also available like collision cover, fire cover, insurance against the pillion rider, etc.
- No Claim Bonus – A two-wheeler plan is a one-year contract renewable every year. If there is no claim, the company pays nothing. However, for every claim-free year, the policyholder is eligible to earn a No Claim Bonus which increases for every subsequent claim-free year. The rate of discount is almost fixed which starts at 20% for the first year and then increases to 25%, 35%, 45%, and 50% (maximum limit) in subsequent years. This bonus reduces the renewal premium payable.
These points are the basic guidelines for understanding your two-wheeler insurance plan.
Below are some comprehensive plans and their comparative analysis for a new Yamaha Fascino bike bought in August 2015 and registered in Mumbai:
| Insurer | IDV | Premium (including taxes) | Features |
| HDFC Ergo | Rs.49, 400 | Rs.1442 | Covers loss to vehicle, third party liability, and personal accident cover of Rs.1 lakh for driver/owner |
| Reliance General | Rs.44, 000 | Rs.1167 | A comprehensive policy including third-party liability, own damage, and driver cover |
| Bajaj Allianz | Rs.49, 706 | Rs.1256 | A comprehensive cover with Rs.1 lakh personal accident cover included |
Just buying a two-wheeler is not enough. Know what the insurance policy covers and its costs so that you are free from any ambiguity.
