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IRDAI rules for two-wheeler insurance policies

Team AckoSept 9, 2022

The Insurance Regulatory and Development Authority (IRDA) was incorporated in 2000. Today, it is known as the Insurance Regulatory and Development Authority of India (IRDAI). This autonomous body charts out rules and regulations regarding Indian insurance to ensure impartial, straightforward, and orderly conduct. In this article, we will be discussing the IRDAI rules for two-wheeler insurance policies.

IRDAI Rules For Two Wheeler Insurance Policies

IRDAI rules for two-wheeler insurance policies in India

The IRDAI rules for two-wheeler insurance policies in India are extensive and precise. They cover the types of coverages, a plan’s inclusions and exclusions, rules for insurance renewal, etc. As mentioned earlier, they are put into place to protect the interests of the insured. Thus, they are binding for both the insurance provider and the insured.

IRDAI guidelines for two-wheeler insurance covers

All the two-wheeler insurance covers commonly provided by Indian insurers are subject to IRDAI rules. Mentioned below are the two foundational types of 2 wheeler insurance covers and their respective guidelines.

Third-party Liability Insurance

Third-party Liability Insurance is the most basic insurance policy you can purchase for your bike. Also, as per The Motor Vehicles Act of 1988, all two-wheeler owners must possess Third-party Insurance. Nonetheless, coverage under this insurance policy is only applicable for third-party liabilities such as injury, death or property damage to a third party.

Comprehensive Insurance

Comprehensive Bike Insurance offers the legally mandated Third-party Liability Cover and an  Own Damage (OD) cover. The OD component of the cover offers financial protection against accidental damage and damage caused by natural and manmade calamities to your bike, and bike theft. Also, this cover can be complemented with add-ons.

Types of coverages

The IRDAI has put forth two-wheeler insurance rules to ensure a fair and efficient insurance process. The following is an overview of the coverages applicable under the two foundational plans. For precise details, have a look at the respective plan’s policy wordings.

1. Third-party Bike Insurance

As mentioned earlier, this plan financially protects the insured against third-party liabilities. As per IRDAI guidelines, the following are some of its coverages.

  • In the event of injury or death occurring to a third party, monetary compensation will be provided by the insurer.

  • The monetary compensation will be according to the loss or injury suffered by the third party. 

  • However, in the case of death, compensation will be calculated based on the deceased individual’s net worth.

  • Damage occurring to a third party’s property will also be covered under this plan. The financial compensation will be according to the intensity of the damages.

2. Comprehensive Bike Insurance

As previously mentioned, Comprehensive Bike Insurance offers extensive coverage than the above-discussed plan. As per IRDAI guidelines, the following are some of its coverages.

  • As per the terms of the plan, the insurer will cover the cost of replacing or repairing bike parts in the event of an accident.

  • The insurer will compensate the Insured Declared Value (IDV) of the two-wheeler in the event of theft or total loss to the bike.

  • In the event of damages resulting from natural or manmade calamities, compensation will be settled for repair or replacement of bike parts.

  • Based on the add-ons purchased, the insurer will compensate for scenarios accordingly.

IRDAI rules for Personal Accident cover

In this section we will discussing IRDAI rules for personal accident insurance. A Personal Accident (PA) cover is a Government-mandated cover. It needs to be purchased separately while insuring your vehicle. It offers a lump sum in the unfortunate event of disability or death to the insured.

Coverage

The sum insured offered under a PA cover is up to Rs. 15 lakhs. Based on the type of loss, a percentage of the sum insured will be paid as compensation by the insurer.

Coverage Monetary compensation
Loss of limbs or eyesight in both eyes 100%
Loss of one limb or one eye 50%
Loss of one eye and one limb 100%
Death 100%

IRDAI New Rules for Two-wheeler Insurance

The new IRDAI rules for two-wheeler insurance released in 2020 include the following.

  • If the penalty for an offence committed by the bike rider is not specifically mentioned in the new rules, then the challan of Rs. 500 for the first time and Rs 1,500 for repetition of offence is charged.

  • Failing to abide by the rules related to the road will attract a penalty of Rs. 500 to 1,000.

  • If a rider does not cooperate with the authorities, they will be charged an additional  Rs. 2,000 for non-cooperation.

  • Riding the bike without an active driver’s licence will attract a fine of Rs. 5,000.

  • A rider riding a bike despite disqualification will be charged Rs. 10,000.

  • Overspeeding while riding will attract a fine of Rs. 1,000.

  • For dangerous driving, the rider will have to pay Rs. 1,000 and/or face 6 months of imprisonment.

Exclusions of a two-wheeler insurance policy

Accidental damages that transpire under the following accident scenarios are usually not covered under two-wheeler insurance.

  • Damages that may result from electrical or mechanical faults in the insured vehicle

  • Being found in absence of necessary documents such as a valid Driving Licence

  • Purposeful damage with the intent of raising an inauthentic claim

  • Damages that may befall beyond the geographical scope of the policy

  • Not obeying road and traffic laws while riding

  • Riding under the influence of critical thinking dampening substances

  • Damages that are byproducts of the regular wear and tear of vehicle components.

IRDAI’s rules for calculating depreciation

The following are IRDAI’s guidelines for calculating depreciation of two-wheeler parts.

  • The depreciation rate of components made of fibreglass is 30%.

  • The depreciation rate of two-wheeler parts like tubes, rubber, batteries, nylon, plastic parts and tyres is 50%.

  • Glass components do not incur any depreciation.

  • The depreciation of metal parts will be as per the terms of the policy.

Note: The above given values are the usual rates of depreciation under two-wheeler insurance. Nonetheless, to find out the exact depreciation rates refer to your bike’s policy document.

Mandatory documents to be carried in an insured bike

The following are the Government-mandated documents that you need to carry in your insured two-wheeler at all times. Alternatively, you could store all these documents in a digilocker (soft copies) and produce them during inspection.

  • Two-wheeler insurance certificate

  • Driving licence 

  • Pollution Under Control Certificate

  • Registration Certificate copy

IRDAI rules for two-wheeler insurance renewal

Given below are some of the important IRDAI rules for two-wheeler insurance renewal. 

  • The policy has to be renewed on time to avail of seamless coverage.

  • The insurer will not be liable to cover damages incurred after the policy expiry. This includes accidental damages occurring during the grace period.

  • If the bike insurance is not renewed within 90 days of its expiry, its accumulated No Claim Bonus (NCB) will become void.

Also, read: Digilocker Bike Insurance

Turn-around time from grievance redressal

IRDAI has defined the turnaround time for addressing grievances so that they are resolved on time. The following table showcases the IRDAI’s defined deadlines for grievance redressal.

Stage Deadline
Acknowledgement of grievance three working days
Resolution of grievance 15 working days
Bike insurance processing and cancellation 15 working days
Claim settlement 30 days

Factors that affect bike insurance premium

The bike insurance premium for the Third-party Policies is stated by the IRDAI. It is based on the bike engine’s cubic capacity. The following factors play a role in bike insurance premium calculation for a Comprehensive Policy.

1. Bike’s age

The market value of a bike decreases as it gets older. Thus, the older the bike, the less the premium payable.

2. Setting the Insured Declared Value (IDV)

The IDV value is the financial compensation payable by the insurer if theft or total loss occurs to the insured bike. The IDV value is usually set at the current market value of the two-wheeler. However, the higher the IDV you select, the higher will be the premium charged.

3. Special discounts

Insurers may award discounts if you buy anti-theft devices approved by the Automobile Research Association of India (ARAI). Also, you can avail of discounts if you are a member of organisations like The Automobile Association of India. 

4. Choosing add-ons

As mentioned earlier, add-ons can be opted under Comprehensive Bike Insurance. These will help to enhance the coverage. Nonetheless, based on the add-ons you choose, you may have to pay a little extra on the policy premium.

5. Late renewal

If your bike insurance is not renewed on time you can lose the applicable renewal discounts like NCB. This could significantly increase your premium payable. Thus, we recommend that you renew your bike insurance well before its expiry.

6. No claim bonus (NCB)

As the name may suggest, a NCB in bike insurance is a discount offered by insurers to customers who do not raise claims during a policy term. The maximum discount you can avail of under NCB is 50% of the policy premium (OD component) after the completion of five successive claim-free terms.

7. Look and performance-enhancing modifications

Some bike owners may modify their bikes to enhance the bike’s aesthetics and engine performance. These additional accessories may be pricey. Thus, taking into consideration the cost of these additional parts, the premium charged will also be higher.

Also, read: Lapsed Bike Insurance Policy

In a nutshell

  • Bike insurance is essential for managing costs arising from accidental damages. 

  • The IRDAI facilitates equitable, transparent and organised insurance provisions in India, including bike insurance.

  • The IRDAI’s new rules for two-wheeler insurance, such as updated third-party rates, have to be followed by both the insurance company and the insured.

  • Failing to do so can lead to legal penalties.

Frequently Asked Questions:

The following are some of the frequently asked questions raised regarding IRDAI rules for two-wheeler insurance policies.

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What are the legally mandatory documents that bike owners must possess while riding?

The usual documents that bike owners are expected to carry while riding include the following.

Are physical documents required to be shown during police checks while riding a bike?

No, it is not mandatory for you to produce physical documents during police checks. Alternatively, you can store all the legally essential documents on the Digilocker mobile application and show them when asked.

As per IRDAI guidelines what are the factors that affect ACKO bike insurance premium?

The premium payable under ACKO bike insurance is dependent on the factors discussed in this article. Note that ACKO also offers seasonal discounts. So, stay tuned to get the best deal. To know the premium payable for insuring your bike under ACKO bike insurance, visit ACKO’s Two-wheeler Insurance Premium Calculator. There you can input your bike details and get a free quote.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions. Explore More:

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