A two-wheeler insurance policy safeguards you financially due to the damages incurred by your bike or scooter due to natural or man-made calamities. Also known as bike insurance, it’s one of the most popular insurance policies available with the insurers that you can buy online.
However, before buying, it’s essential to know about certain terminologies which will aid you in understanding various aspects of the policy and making an informed choice.
- Comprehensive policy
It is a type of two-wheeler insurance policy, which offers a financial cushion against the damages incurred due to natural and man-made disasters such as flood, earthquake, lightning, riots, vandalism, etc. A comprehensive bike insurance policy has two components – own damage and third-party damages.
While the former compensates for the damages suffered by you and your bike, the latter comes into picture when losses are incurred by a third-party. To put it otherwise, a comprehensive bike insurance policy offers a 360-degree monetary protection against all probable odds that your two-wheeler is exposed to.
- Cover/ sum insured
It refers to the maximum monetary liability of your insurer in reference to your policy. Let’s understand this with an example. For instance, if the sum insured mentioned in your policy is Rs.5 lakh, it means your insurer would offer this as a maximum compensation, in case of a claim.
You need to bear any expenses incurred beyond this sum from your pocket. Let’s say the claim amount is Rs.5,10,000, then you need to pay the extra Rs.10,000 from your own pocket. The cover/sum insured depends on various factors such as vehicle age, model, engine capacity, etc.
Premium refers to the amount you need to pay every year towards your two-wheeler insurance policy. Your insurer offers you coverage against this amount. While you can pay the entire premium at one go, some insurers also allow paying it in instalments.
You can pay the premium online or offline via NEFT, bank transfer, credit/debit card, demand draft or cheque. Premium varies across insurers and depends on the sum insured, add-on cover(s), and geographical location, among others.
- Add-on covers
This is another essential feature of a two wheeler insurance policy. Add-ons in the bike insurance are similar to riders in life insurance/health insurance, which offer additional coverage over and above the sum insured. Each add-on serves a different purpose and opting for them can fortify your coverage. Some of the common add-ons are:
- Zero depreciation cover – It guards you against depreciation, which can lower the claim amount.
- Engine protection cover – It reimburses the expenses incurred for repairing a damaged engine.
- Lock and key replacement cover – It offers compensation incurred for replacing a lost key.
There are many add-ons available with insurers. Choose the one that best serves your needs.
- Third-party two-wheeler insurance
Also known as third-party liability cover, third party two wheeler insurance takes care of the damages suffered by a third-party or his/her property because of your bike. Having this insurance is mandatory as per the Motor Vehicles Act of 1988.
A recent ruling by the Insurance Regulatory and Development Authority of India (IRDAI) makes it mandatory for new two-wheelers to have a long-term third-party cover of 5 years. Note that a third-party two-wheeler insurance plan only covers damages incurred by a third-party and not you, the rider/owner, of the vehicle.
- No claim bonus (NCB)
No claims bonus or NCB is a perk offered by insurers in a year when you don’t raise any claim request on your policy. Represented as a percentage, this is offered when in form of a discount in premium when you renew your policy.
NCB is awarded to encourage responsible and safe driving practices. Also, many insurers allow you to port NCB earned in case you wish to switch your bike insurance policy.
Knowing the above terms goes a long way in ensuring that you make an informed choice while buying a two-wheeler insurance plan.