In India, third-party motor insurance is mandatory for all vehicles, including two-wheelers. Sadly, the General Insurance Council of India reported that almost 60% of Indian cars and bikes did not have any insurance. From 2015 to 2016, 19 crore new vehicles got registered. But, only 8.26 crore of those got insurance. To help change this, the Insurance Regulatory and Development Authority of India (IRDAI) made five-year third-party insurance mandatory for all two-wheelers. Let’s look at this new rule in a bit more detail.
Mandatory 5-Year Bike Insurance
The IRDAI rule came into effect on 1st August 2020. Since then, bike insurance companies must offer a five-year third-party plan. In addition to this, two-wheeler owners can also buy a single-year own damage policy. All new bikes bought after 1st August 2020 will come with a 5+1 insurance policy. So, the vehicle will have a five-year third-party policy and a single-year own damage plan that you can renew every year.
How Does This Help Me?
Given the new rule, you must get a five-year third-party policy. Let’s take a look at how this benefits you:
Long-term policies have a lower annual premium than short-term ones. So, you have to pay less for your five-year policy than an annual one.
Since you have to renew your policy once in five years, you don’t have to worry about your paperwork expiring every year.
When you purchase a single-year policy, you run the risk of losing your cover if you forget to renew your policy on time. With the new five-year policy, you don’t have to worry. You will continue to enjoy third-party coverage even if your own damage policy expires.
Nobody likes receiving a traffic challan. Today, police officers can check your bike paperwork online and issue you a fine for not having the right insurance. With the five-year third-party policies, you can avoid such challans.
Is a Five-Year Policy Mandatory for All Types of Insurance?
No, it is not. If you buy a new bike, you will purchase a five-year third-party policy and a single-year own damage plan. You have to renew the latter policy every year. But, you won't have to worry about your third-party policy for five years.
A five-year third-party policy provides coverage for longer at a lower price. With this new rule, the IRDAI will help ensure that two-wheeler-owners enjoy the cover they legally need to ride their bikes in India.