Take Note of These IRDA Rules for Bike Insurance Policies in India

The Indian insurance sector is regulated by the Insurance Regulatory and Development Authority of India (IRDAI) which is the apex body for all things insurance in the country. Just like it regulates the life insurance segment, it also regulates non-life insurance, which includes two-wheeler insurance policies among other types of non-life insurance policies. For effective governance, IRDAI has laid down some rules, and it is compulsory for the insurance company to follow them. These rules help secure your interest as a policyholder while offering insurance coverage for your bike. Here are some of them to note when you buy bike insurance online:

Rules concerning third party bike insurance

A third-party liability insurance policy offers financial cover for liabilities faced by you, the policyholder. These liabilities can be due to an injury suffered by a third person or damages to their vehicle.

• Third party bike insurance is the bare minimum insurance coverage that is required by the Motor Vehicles Act. Since this policy is the minimum requirement, its premiums are decided by IRDAI.
• Such third-party policy compensates for injuries or death of the third party. Not just human injury, but also any damages to the property of such a third person is covered under a third-party cover.
• The amount of compensation is capped at a maximum of ₹7.5 lakhs for damages, whereas there is no such maximum compensation for injuries. The tribunal, based on the injuries sustained, decides the compensation to be provided.

Rules for comprehensive bike insurance

Unlike third-party cover, a comprehensive policy, as the name suggests, provides coverage for not just third-party damages, but also any repairs that are required for your bike.

• Comprehensive plans comprise three components—third-party cover, own-damage cover and personal accident cover.
• While the rules for third-party cover are the same as listed above, the comprehensive cover includes protection from damages to your bike. During an accident, it is not only a third person’s vehicle that might get damaged. You might also face damages to your bike. Here’s when the own-damage cover safeguards you.
• Apart from repairs to your vehicle due to accidents and collisions, natural disasters, as well as man-made perils, are covered by the own-damage cover. In addition, an own-damage cover protects against the theft of your vehicle.
• In situations of theft or damage beyond repair, the insurer compensates by paying the insured declared value of your bike as compensation.
• The personal accident cover is another mandatory coverage included in the comprehensive policy; however, it is unbundled from such coverage. Hence, if you already own a personal accident plan, you need not buy it again as a part of a comprehensive policy.

*Standard T&C Apply In addition to the above rules concerning the different types of insurance plans, IRDAI has also specified depreciation rules, wherein a certain prescribed percentage can be charged for different spares.

• Fibreglass components are depreciated at 30% whereas rubber, nylon, batteries and other plastic parts, including tyres at the rate of 50%.
• There is no depreciation when it comes to glass parts.
• Further, metal spares are depreciated subject to your policy terms.

Additionally, depreciation rates are also prescribed to arrive at the IDV, which is critical as it is the maximum compensation that the insurance company pays. The table below specifies such rates based on the age of your bike:  

Age of the vehicle	Depreciation for the purpose of IDV	Resulting Insured Declared Value
Less than and equal to 6 months	5%	95%
More than 6 months but not more than 1 year	15%	85%
More than 1 year but not more than 2 years	20%	80%
More than 2 years but not more than 3 years	30%	70%
More than 3 years but not more than 4 years	40%	60%
More than 4 years but not more than 5 years	50%	50%
More than 5 years	Mutually decided by insurance company and policyholder

  Lastly, an invalid /expired policy attracts a fine for driving without insurance. So, make sure to get your policy or complete the bike insurance renewal on time, while these rules help safeguard your interest. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.