There are two reasons why we purchase bike insurance. First to meet legal requirement and avoid being fined for violating traffic rules. Second is to cover monetary loss incurred in the unfortunate event of bike theft or damage (be it an accident or natural calamity). This post is all about how to purchase bike insurance at lowest price possible.
Types of Two Wheeler Insurance Policies
There are three types of bike insurance policies. Let us take a quick look at scope of each type of policy first.
Comprehensive Bike Insurance
This is the most popular insurance type that most of us are used to. Probably this is the one which you might be already paying for.
Comprehensive insurance covers these:
- Damage to bike (be it accident, fire, natural calamity or a theft)
- Damage to third party (both vehicle and medical expenses in the case of an accident)
- Personal accident cover to self (this is sort of a mandatory add on, check out Personal Accident Cover section below for clarity)
Comprehensive two wheeler insurance policy has higher premium amount as it covers both third party and own damage. IDV (Insurance Declared Value) is one of the factors that affect comprehensive insurance premium cost. Higher the IDV, higher the insurance cost. IDV is higher for new vehicles and gets reduced each year as the vehicle’s value gets reduced due to depreciation.
Most vehicle insurance providers allow you to choose the Insurance Declared Value yourself (within a range based on vehicle price and age). Declaring higher IDV gives a higher cover value for your two wheeler, but also increases insurance cost.
Third Party Bike Insurance
This type of policy covers damage only to third party. It covers both injury and property damage to third party. The property could be vehicle or building as well. There is unlimited coverage to injury but cover for property damage is limited to Rs.1,00,000 (Rs 7,50,000 in case of car). We will explore how to make use of this policy type with some tweaks to get bike insurance at lowest price in this article.
Own Damage Bike Insurance
This policy type is a new introduction effective from 1st September 2019 and not very common/popular in fact. This covers damage of your own bike and nothing else. Losses due to theft, fire, accident and natural calamity to your bike are covered by this policy. This policy is for some one who already bought third party insurance, but later decides he wants cover for his own vehicle too.
To explain it simple: Comprehensive Insurance = Third Party Insurance + Own Damage Insurance.
Bike Insurance at Lowest Price:
Fine for riding a two wheeler without valid insurance is Rs.1000. In the case of Car (Light motor vehicle) it is Rs.2000. If your main objective for buying bike insurance is to meet legal requirement and avoid hefty traffic fine, you should go with third party bike insurance. Ensure you stick to below options to get the lowest insurance premium value possible
Don’t take comprehensive insurance
Comprehensive insurance has a higher premium rate as it covers own damage to bike as well. To meet legal requirement a third party insurance alone will suffice!
Limit TPPD (Third Party Property Damage)
As mentioned already third party insurance provides unlimited cover for third party injury and Rs.1,00,000 for TPPD (Third Party Property Damage). You can bring down the cost of third party insurance by Rs.50 if you choose to limit Third Party Property Damage to Rs.6000 (third party injury cover remain unchanged, only property damage cover comes down). Just ensure you have the right options chosen to limit/restrict your TPPD to Rs.6000 at the time of renewal.
While there is no legal requirement to have high TPPD cover, one should be aware of consequence of restricting TPPD – It drastically brings down the cover provided for third party property damage from Rs 1,00,000 to a mere Rs 6000. That is a 94% reduction, on the other hand premium comes down by Rs 50.
An illustration on this taken from HDFC ERGO website. 18% GST would be charged on the below prices.
Skip Personal Accident Cover
You can skip opting for Personal Accident Cover (well.. then it is expected that you already have an accident insurance policy. May be you already have one provided by your employer. Read Personal Accident Cover section below for more clarity)
Avoid Taking Add-ons
Ensure you don’t opt for any Add-ons to your bike insurance policy (for list of add on refer Bike Insurance Add-ons section below). Unless otherwise you have a specific need there is no compelling reason to take an Add-on to your insurance policy. More over some add-ons will require you to have a comprehensive insurance policy instead of third party insurance policy.
Does Multiyear Third Party Insurance Cost Less?
No. Even if you take insurance for 2 or 3 years there is no special discount offered for it. You pay insurance amount * number of years. This can be observed from image shown above (under Limit TPPD section).
There is still one benefit by going with multiyear third party insurance. Each year IRDAI (Insurance Regulatory and Development Authority) reviews and revises insurance premium rates. By opting for multiyear insurance you could lock in at the existing price for the coming years.
On a side note, IRDAI has not incremented third party insurance premium in the current period. Prevailing third party premium rates are that fixed during 2019-20. A decision most likely due to ongoing covid situations. Personally, I feel the quantum of next increment could be higher to offset for this gap period. 2021 may be a good year to consider multiyear insurance to lock in at prevailing cost of premium.
Does Cost of Third Party Insurance Vary Between Different Insurance Providers?
No. Third party insurance cost remains fixed across different insurance providers. For example, refer to below price quote from various insurance providers, as fetched from an insurance aggregator portal (rates seen here are excluding 18% GST).
One factor that affects the cost of two wheeler third party insurance premium is the engine capacity. For e.g. two wheeler with less than 75cc have lesser premium compared to two wheeler with 75 – 150cc engine capacity. 150-350cc, 350+ cc are other categories which are priced even higher.
NCB (No Claim Bonus) does not affect the price of third party insurance. NCB is a discount provided at time of policy renewal if no claims were made during previous years. The NCB is applicable only in case where you are going for comprehensive insurance.
Bike Insurance Add-ons
Most of the insurers offer below add on options on top of your insurance policy.
Personal Accident Cover
It is compulsory to have a personal accident cover of Rs 15 Lac towards death and disability. There is no need to take this add on if you already have a personal accident cover for Rs 15 Lac. For e.g. you already took this as part of insurance for another vehicle that you own, or your employer has a policy that offers personal accident protection.
There is also accident cover add on option to cover passenger (bike pillion rider), another accident cover add on option to cover paid driver (don’t ask me who has a paid driver for a bike! such is the policy framework). Both these are completely optional.
You should have a comprehensive insurance policy to opt for this. This add on provides road assistance when your vehicle breaks down on road for reasons ranging from punctured tire to empty fuel tank. Check with your insurer for full terms and conditions.
No Depreciation cover
Though your bikes value get depreciated year on year as it gets old, With this add on you get the full repair and replacement cost on accident or damage to bike. But this add on will have a significant premium though. Refer image below for an indicative price of cost involved.
Cover For Consumables
Yes, it looks funny but there exists an add on just to cover consumable like engine oils, lubricants etc. These are not covered by the standard comprehensive insurance policy.
Indicative Price of Add-ons
For a indicative idea of costs associated with various add-ons mentioned above you can refer to below capture. This sample quote is for a 2017 Honda Dio (DRUM REPSOL BSVI Petrol 110 variant) from insurance provider Digit. You may also note the customizable slider option for IDV (Insurance Declared Value).
And a final word.. Most of the discussion here hold good for car insurance too. This can be applied to buy or renew car insurance at lowest price.