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Difference between bike warranty and insurance: Which is better?

Team AckoSep 20, 2021

Insuring your bike is an excellent method to reduce your financial loss in case of accidental damages to your bike. And, bike warranty is an excellent source of financial protection in case of faulty parts. Both provide the comfort of financial security. But, which is better? In this article, you will learn about the difference between bike insurance and warranty along with their benefits.

Bike Warranty Vs Insurance Which One Is Better

What is bike insurance?

Bike Insurance Policy is an agreement between the insurance company (ACKO) and you. You pay a premium in exchange for financial security against third party liabilities and accidental damages/losses to your bike. You must insure your bike with the government-mandated Third party Liability Plan even though this plan does not cover damages/losses to your bike.

You can select the Comprehensive Bike Insurance Policy since it includes the compulsory Third party Liability Plan along with Own Damage (OD) bike insurance. The OD insurance provides financial coverage against damages/losses such as accidents, fire, etc.

You can buy, renew and submit claims without any hassles at ACKO. There are no agents to influence your decision; hence, you get to transact directly with ACKO. Most of our operations are digital; therefore, our operational costs are much lower. Hence, we can design low-cost bike insurance plans and are able to provide an excellent digital experience when you insure your bike with ACKO.

What is a bike warranty, and what does it cover?

Meaning

A bike warranty is a commitment by the manufacturer guaranteeing to replace or repair your vehicle if required. A warranty acts as a shield against unforeseen or sudden financial loss due to a defect in the bike.

Significance

When the vehicle manufacturer issues a warranty, it promises that the bike is free from defects during the warranty period. If any defects arise during the warranty period, the manufacturer will replace or repair the defective part without additional costs to the customer.

Inclusions: What is covered?

  • Mechanical parts (engine, gearbox, etc.)

  • Electrical parts (ignition coil, CDI unit, etc.)

  • Safety equipment (ABS, ride-by-wire, etc.)

Exclusions: What is not covered?

  • Consumables (washers, rubber, plastic components, etc.)

  • Regular wear and tear

  • Labour costs

  • Negligent riding

  • Illegal racing

  • Alterations/modifications

Bike warranty vs. bike insurance: Which is better?

Following are the main differences between bike warranty and bike insurance.

Coverages Bike Insurance Bike Warranty
Third-party liabilities It covers damages to third-party property, injuries to third-party or death. It does not cover third-party liabilities.
Damages to the insured bike It covers accidental damages to the insured bike. It does not cover accidental damages to the insured bike.
Faulty parts of the bike It does not cover or pay for defective parts. It does cover faulty parts and gets it replaced.
Customisation Include valuable add-ons to extend the coverage. No option to customise.
Is it compulsory? While the Own Damage insurance is optional, the Third-party Liability Plan is mandatory. New warranties for new two-wheelers are part of the purchase of the bike. However, extended bike warranties are optional.
Personal Accident (PA) cover The mandatory PA cover must be bought separately. No option to purchase a PA cover
Theft of the bike It covers bike theft. It does not provide coverage for theft of the bike.
Total loss (damages that are beyond repair) It covers total loss. It does not cover total loss.
Usual wear and tear No coverage No coverage
Mechanical/electrical failure No coverage Covers mechanical/electrical failure within the warranty period.
Man-made/natural disasters (cyclones, floods, vandalism, riots, etc.) Does cover man-made or natural disasters. Does not cover man-made or natural disasters.
Fire/explosion Yes, it covers. No coverage

The table above clarifies that both the bike warranty and bike insurance provide financial security against unforeseen losses or damages to the bike. There is, however, a difference between the two. While the bike warranty offers coverage against faulty parts, the bike insurance provides coverage against accidental damages or losses to the insured bike.

It is recommended that you choose both types of financial security since you are assured that insurance will cover accidental damages and bike warranties will cover faulty bike parts.

Bike warranty types

Here are the main types of warranty for bikes.

New warranty

You purchase the new warranty at the time of purchase of the new bike. Generally, the warranty period ranges between 3 to 5 years or based on kilometers.

Extended warranty

Upon the expiration of the new warranty, you have the choice to purchase an extended warranty. However, under the extended warranty, the coverage plans may differ from new warranties.

Bike warranty: Pros and cons

Following are the advantages and disadvantages of a bike warranty.

Pros: Bike warranties

  • You do not have to worry about faulty bike parts.

  • You have the choice to include extended warranties.

  • It is not compulsory.

  • New bike warranties are generally issued without any costs.

Cons: Bike warranties

  • It does not cover accidental damages to the bike.

  • It does not cover parts such as tyres, brake pads.

  • No choice to include add-ons.

  • It does not cover third-party liabilities.

  • No choice to include Personal Accident (PA) cover.

  • Unlike an insurance policy, you cannot customise bike warranties.

Conclusion

The bike warranty and bike insurance are two different types of financial protection and aim to protect you and your bike in different ways. Hence, if your bike breaks down due to faulty parts, the bike warranty will provide coverage, and if your bike is damaged due to an accident, the bike insurance will provide coverage.

Therefore, it is better to have both types of financial coverage knowing that you are protected against faulty parts or in case of accidental damages.

Frequently asked questions

Following are some common questions and answers about bike warranty and bike insurance.

Is the bike warranty the same as bike insurance?

Both provide financial protection and may even overlap at times. However, they are very different from each other since the coverage is different. For example, bike warranties provide coverage against faulty parts of the bike. In contrast, bike insurance provides coverage against damages due to an accident, fire/explosion, man-made/natural disasters, or losses due to total loss (damaged beyond repair) or theft.

Are bike warranties worth it?

Bike warranties are undoubtedly worth it since they provide coverage against faulty parts, especially in case of a breakdown due to an issue with the parts or component failure.

Is it worth buying an extended warranty for a used bike?

It depends on the condition, age, and if it is a high-end bike. Bike warranties decrease costs arising from repair caused by parts at the end of their operational life. Therefore, an extended bike warranty will reduce unnecessary expenses for replacement parts.

Do you need bike insurance and a bike warranty?

While bike insurance provides financial protection against accidental damages, bike warranties offer financial protection against faulty parts. Hence, both play an essential role in providing financial security for different liabilities.

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