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Reasons to choose long-term Third-party Two-wheeler Insurance

Team AckoNov 8, 2021

The primary advantage of buying a long-term Third-party Bike Insurance Plan is that you are shielded against third-party losses for a period of 5 years. Imagine the extent of out-of-pocket expenses you would bear without this plan plus the hassles of renewing it every year. 

In this article, we aim to explain how a long-term Third-party Bike Insurance Policy will come to your aid and reduce additional expenses in case you affect them with your insured bike. 

If you are new to the concept or are looking to buy a new bike then here is the meaning of long-term third-party insurance and reasons to get this plan.

Reasons to Choose Long Term Third Party Bike Insurance

What is long-term Third-party Two-wheeler Insurance?

There can be different types of third-party losses, for example, third-party property damage, injury, disability, or death. Paying fair compensation to them can pose a high risk to your finances. Essentially, this is where a Third-party Bike Insurance Policy comes into play. It will bear all the expenses related to third-party losses. 

Earlier, the law stated that you (a bike owner) can buy an annual or better known as a short-term third-party policy to cover these costs. But considering the importance of this basic policy and to boost the number of insured bikes, the regulator has made the much-required amendments in the law. 

As per recent orders from the insurance regulator, if you buy a new bike then you must buy a long-term Third-party Bike Insurance Plan as well. You can pair it with a Comprehensive policy. That is up to you. But buying a 5-year Third-party Plan is mandatory with new bikes.

Why should you opt for long-term Third-party Two-wheeler Insurance?

Buying a long-term insurance plan for your new bike is mandatory. But what about older two-wheelers? In this case, the government does not mandate you to buy a long-term third-party policy. 

If that’s the case, you may think, why should you still opt for a multi-year plan? There are many other benefits of buying a long-term plan for your old bike.

1. You shield yourself from increasing premiums

While purchasing a long-term Third-party Policy you pay a fixed premium for multiple years. This saves you from paying a higher price each year. Note that the regulator, IRDAI (Insurance Regulatory and Development Authority of India) determines the price of a Third-party policy and not the bike insurance company. The premium amount for this plan is standard across all insurers. So there is no scope for special discounts or better rates from another insurer. 

IRDAI revises the premium of Third-party Bike Insurance on a periodic basis. Considering this revision in prices, the Third-party premium rate may increase on a year-on-year basis. In this case, if you opt for a Third-party Policy,  the premium for each of the 5 years will remain the same and the increased rate is not applicable.

2. Renew the policy directly after 5 years

Data shows that most bike owners fail to renew the insurance policy in time. This exposes them to high financial liabilities related to traffic fines, and third-party losses. When you buy a long-term policy, you are saved from the hassle of frequently renewing the bike insurance policy. You can ride the bike without worrying about the fines or losses.

Another common reason that people avoid renewing bike insurance is they assume bike insurance renewal is a tedious process. However, with the advent of insurtech companies (such as ACKO), buying, renewing or even claiming against bike policy becomes a walk in the park to you.

3. Enjoy continued coverage for a longer period of time

The government mandates bike owners of new bikes to buy a 5-year Third-party policy with or without the Own Damage (damage to the insured bike) cover. This is to ensure that the bike owner is covered against at least Third-party losses for a longer duration of time as compared to an annual policy. Additionally, since a lapsed policy can lead to higher out-of-pocket expenses, you can avoid it with a multi-year policy.

In a nutshell

Buying a 5-year policy may seem like a long-term commitment but it also offers more benefits as compared to an annual policy. Apart from third-party losses, you also can be stress-free about any type of fines related to bike insurance as you are meeting the compliance requirement by opting in for a long-term plan.

A long-term plan (both Third-party and Own Damage) can shield you from increasing premiums as well. This one-time investment will take care of all your bike insurance needs for the next five years. Additionally, if you opt for a long-term Comprehensive plan, and avoid making claims, then you will also get discounts on premiums while renewing the plan. 

Frequently asked questions

In this section, we have answered some questions related to long-term Third-party Bike Insurance Plans. But if you have a specific query, do write to us at [email protected] and we will try to answer your questions to the best of our knowledge.

Is Comprehensive Bike Insurance also mandatory?

Opting for a Comprehensive policy is rather a logical choice as it offers coverage to repair damages to your bike along with protection against third-party liabilities. Buying this plan will help you get extensive coverage against events like accidents, natural calamities, fire, theft, total loss, third-party liabilities, etc. However, it is not mandatory to buy a Comprehensive Bike Insurance Plan.

Is buying only the mandatory two-wheeler insurance policy sufficient?

Since you receive coverage only for Third-party losses, buying only this mandatory plan may not suffice. You can try a short-term, standalone Comprehensive plan with a long-term mandatory policy if you want to test how useful both plans are.

Why did the regulator make it mandatory to buy a long-term Third-party Bike Insurance Policy?

Many bike owners avoid buying bike insurance assuming that it is an added expense. But if you look at the larger picture, this investment can help you cover higher costs if you accidentally hit a third party with your bike or damage their property. Thus, the regulator made it mandatory to buy not just an annual plan but a long-term third-party policy to increase the number of insured bikes.

Can I change from a Third-party plan to Own Damage plan?

Switching from third-party policy to the Own Damage plan may not be possible as buying a Third-party plan is mandatory in India. If you have an old bike you can consider buying a Comprehensive insurance plan to enjoy the benefits of dual coverage. If you already own a Third-party plan, you can supplement it with Own Damage cover to get maximum coverage.

How can I cancel my long-term Third-party Bike Insurance Policy?

Since having a Third-party Bike Insurance Policy is mandatory by law, you cannot cancel the plan. It will get terminated in case of major events like total loss, or theft of the bike.

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CIN: U66000KA2016PLC138288

IRDAI Registration No: 157

Category: Non-Life Insurance

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