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

The Indian insurance sector is regulated by the 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:

What is the Insurance Regulatory and Development Authority of India (IRDAI)?

As we know, the insurance sector in India is controlled by the IRDAI, which stands for Insurance Regulatory and Development Authority of India. It is a significant government organisation that ensures fair practices in the insurance sector. It aims to advance the growth of the insurance sector while defending the rights of policyholders. The IRDAI sets rules and guidelines for insurance companies, especially those that offer IRDA two-wheeler insurance, to preserve transparency, efficacy, and accountability in the insurance sector. IRDAI's regulations benefit providers and consumers by sustaining the insurance industry's reliability and credibility.

IRDAI Guidelines for Two-Wheeler Insurance Covers

The IRDAI has set comprehensive guidelines to ensure a fair two-wheeler insurance policy. These guidelines mandate a minimum coverage for third-party liabilities, protecting against financial losses caused to others. The IRDAI guidelines for two-wheeler insurance also promote comprehensive insurance, covering personal vehicle damage from accidents, theft, fire, and natural calamities. They ensure fairness, regulate premium rates, and streamline the claims process for efficiency and transparency. These measures protect consumers, provide financial security, and ensure a smooth, reliable insurance experience for two-wheeler owners in India.

Types of Bike Insurance Coverage as Per IRDA

The IRDAI has introduced new two-wheeler insurance rules to ensure a fair and efficient insurance process. Here is an overview of the coverages under the two main plans. For precise details, refer to the respective plan's policy on the IRDAI website.

1. Third-party Liability Insurance

Third-party Bike Insurance protects the insured against third-party liabilities. According to IRDAI guidelines, the insurer provides monetary compensation if a third party is injured or dies, depending on the injury or loss suffered. In the event of death, the compensation is based on the deceased's net worth. Additionally, the plan covers damages to a third party's property, with compensation determined by the extent of the damage.

2. Comprehensive Insurance

Comprehensive Bike Insurance offers more extensive coverage than the basic third-party plan. According to IRDAI guidelines, this plan covers various scenarios. The insurer will pay for the replacement or repair of bike parts in case of an accident. The insurer will compensate the two-wheeler's Insured Declared Value (IDV) if the bike is stolen or completely lost. The plan also covers repair or replacement costs for damages caused by natural or manmade calamities. The insurer will also compensate for specific scenarios based on the add-ons purchased.

IRDAI's New Two-wheeler Insurance Rules

Below are the latest IRDAI guidelines for two-wheeler insurance:

1. If a rider commits an offence not specified in the new IRDAI rules, they face a fine of Rs. 500 for the first instance and Rs. 1,500 for subsequent violations.
2. Violations of road rules carry penalties ranging from Rs. 500 to Rs. 1,000, depending on the severity of the offence.
3. Non-cooperation with authorities during road incidents results in an additional fine of Rs. 2,000.
4. Riding without a valid driving licence incurs a hefty fine of Rs. 5,000.
5. Riding despite disqualification leads to a substantial penalty of Rs. 10,000.
6. Fines of Rs. 1,000 are imposed for overspeeding.
7. Engaging in dangerous driving activities results in a fine of Rs. 1,000 and/or imprisonment for up to 6 months.

IRDAI rules for the personal accident cover

IRDAI rules for depreciation

IRDAI provides clear guidelines for calculating depreciation on various parts of two-wheelers: Fibreglass Components These parts depreciate at a rate of 30%. Tubes, Rubber, Batteries, Nylon, Plastic Parts, tyres Depreciated at a rate of 50%. Glass Components Do not depreciate, meaning they are replaced without any deduction. Metal Parts Depreciation rates for metal parts vary and are specified in the insurance policy terms. These rules are used to calculate depreciation on vehicle parts when making a claim. Depreciation rates help determine the amount of compensation for damaged or replaced parts.

IRDAI Guidelines for Bike Insurance Renewal

Here are some important IRDAI rules for renewing two-wheeler insurance:

1. It's essential to renew your policy on time to ensure continuous coverage.
2. Damages occurring after the policy expires, including during the grace period, won't be covered by the insurer.
3. If the bike insurance isn't renewed within 90 days of expiry, any accumulated No Claim Bonus (NCB) will be forfeited.

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.

1. 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.
2. 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.
3. 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.

1. Comprehensive plans comprise three components—third-party cover, own-damage cover and personal accident cover.
2. 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 damage to your bike. Here’s when the own-damage cover safeguards you.
3. 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.
4. In situations of theft or damage beyond repair, the insurer compensates by paying the insured declared value of your bike as compensation.
5. 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.

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.

1. Fibreglass components are depreciated at 30% whereas rubber, nylon, batteries and other plastic parts, including tyres at the rate of 50%.
2. There is no depreciation when it comes to glass parts.
3. 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:

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.

FAQs

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

Bike owners must possess a valid driving licence, vehicle registration certificate (RC), and valid insurance documents while riding.

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

Yes, physical documents like licence, RC, and insurance are required during police checks for bike riders. However, you can also show soft copies of your documents.

As per IRDAI guidelines, what are the factors that affect bike insurance premiums? 

Factors affecting bike insurance premiums include the bike's make/model, age, location, usage, add-ons, and the insured's claim history.     *Standard T&C Apply *Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.