Sunday, February 5, 2023

Why Do You Need To Have Insurance For Bike In India? An Important Guide

Two-wheelers are particularly suited to Indian roads, making difficult routes more navigable. Bikes are often the preferred mode of transport in dense cities with a lot of traffic snarls to weave through. The same can be said of narrow rural networks. 

Whether for regular commutes or for adventure travel, if you are hunting for the perfect bike, you should be aware of the legal requirement to have Insurance for bike in India. The Insurance Regulatory and Development Authority (IRDAI) sets laws that govern two-wheeler insurance policies. Currently, there are a few mandatory requirements that you need to be aware of. 

Here is a brief summary of the reasons behind the requirement for bike insurance in India.

What type of insurance for bike is mandatory as per IRDAI?

As per the Motor Vehicle Act 1988, it is mandatory to obtain a third-party (TP) insurance for bike. This cover protects you from financial losses that occur when your insured two-wheeler causes injury to a third party. The liability could take the form of injury or death to the third party as well as any damage to property.

Apart from the third-party insurance, you can also get a comprehensive bike insurance plan and an own damage cover. Only the third-party insurance for bike is mandatory though. However, you may want a plan that is wider in scope to cover your own vehicle as well as protect your savings. 

Why is it mandatory to obtain a third-party bike insurance policy?

In insurance, the first party is you, the person who is buying insurance. The second party is your insurer, the provider who offers you cover in exchange for the premium. Finally, the third party is anyone other than the first and the second party. 

The principle involved in making it necessary to have third-party insurance for bike is that there is a debt of justice owed to the third party. Damages to person or property can lead to huge costs. The regulatory authorities are keen to provide you with the means to fulfil your legal obligations. 

For instance, most bikes used for commuting cost under Rs.1 lakh. However, third-party insurance offers financial protection of up to Rs.7.5 lakh for damages to third-party property. In case of damages to person, there is no limit. So, by making TP insurance for bike mandatory, the authorities safeguard all riders from high costs.

The IRDAI regulates the prices of third-party bike insurance policies. The cost of a bike insurance, compared to the cost of a bike, is small. So, the demand to make insurance for bike mandatory vis-à-vis the benefits is justified.

Another factor to consider is the high rate of accidents across the country. This coupled with the bad state of roads and poor traffic sense makes it imperative for each rider to have a financial safety net. Not having third-party insurance for bike exposes you to paying a hefty fine as well as chances of imprisonment. So, be aware and ensure you renew your policy before the end of its term. 

Is it mandatory to obtain a third-party cover for 5 years?

Despite the prevailing laws, many riders do not insure their vehicles or have their insurance renewed. In fact, over half of the bikes on Indian roads do not carry an insurance policy. To address this situation, the Supreme Court in 2018 gave directives for long-term policies.

Currently, if you are purchasing a new two-wheeler, you have to take a 5-year TP insurance for bike. This strategy, by the authorities, also helps tackle the issue of policies not being renewed. You can also take an Own Damage cover of a shorter duration, such as 1 year, along with the 5-year TP insurance. 

Now that you know why the Government of India requires you to purchase third-party insurance for your bike, explore the policies in the market. Pick one that ticks all the right boxes and enjoy riding your two-wheeler without worrying about being on the wrong side of the law!

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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