5 Things you must know before purchasing Bike Insurance
The thrill to ride a brand-new bike is unparalleled. The feeling is liberating. As fun as it can be, it is also dangerous. This danger can be kicked to the curb by following the traffic rules, wearing a helmet and being alert on the road.
Also, with a mammoth portion of our population using a two-wheeler as a means of transport on a daily basis, you and your vehicle needs to be protected from all varieties of mishaps. This is where bike insurance can save you at the time of financial losses.
Hence, as per section 146 of The Motor Vehicle Act, 1988 it is mandatory to have third party motor insurance. Third party motor insurance covers any loss/damage to the third-party property, bodily injured and death of the third party.
As important as it is to have a Third-Party Liability (Motor) Insurance at hand, it is also essential to insure yourself and your vehicle. You need to make an informed decision while purchasing this kind of insurance, which is known as Comprehensive Insurance.
What you must know before purchasing bike insurance
Add-on or no add-on - Though not compulsory, add-ons can only be combined with a Comprehensive Insurance policy. Add ons provides additional coverages at additional price/premium. These are optional as not everyone would be inclined to pay for the feature they are not keen on using. Therefore, an add-on will increase the price of the premium charged.
The Insured Declared Value (IDV) - IDV factor is the current market value of your vehicle. In case your bike is lost, stolen or has undergone total loss, it’s the Insured Declared Value that you receive. Hence, it is vital to declare the correct value as it will directly impact your insurance premium. Since the value is dynamic, it is calculated again and again, each time you renew your policy.
The formula used to calculate it is:
IDV = (Price listed and stated by manufacturer (Invoice Price) – Depreciation) + (Extra accessories – Depreciation)
Opting for Voluntary Deductible - Deductibles can be classified into two types—Voluntary and Compulsory. As the name suggests, a compulsory deductible is applicable by default. However, a voluntary deductible is a contribution that is applied over and above the compulsory deductible.
Hence, when you opt for a voluntary deductible during a claim settlement, you will be contributing a certain amount. Increasing your voluntary deductible thereby decreases your motorcycle insurance premium along with the receivable claim amount.
No Claim Bonus - You will make yourself eligible for availing a No Claim Bonus by each year that passes without making a claim. It is a feature that offers you a discount that you can obtain on premiums for having a good driving and zero accident claim record.
Hence, for every year that goes by without making a claim, a small percentage of the discount will be increased.
While purchasing insurance - Gone are the days where you required to visit the insurance companies and enquire about their plans. Internet has eased out the process of purchasing bike insurance online. It will take you less than 5 minutes to insure your two-wheeler, provided you are well aware about the policy’s pros and cons.
Choose an insurance company which provides a convenient experience both before and after the purchase. You must also check the insurer’s Claim Settlement Ratio and go through the customer reviews to know their credibility. Furthermore, ensure that your bike insurance policy undergoes periodic renewal. Generally, a motorcycle insurance policy lasts for a year.
Common mistakes that are made while purchasing a Bike Insurance
Along with the awareness of the 5 factors mentioned above, you must also know of the don’ts that are better off avoided.
- Not transferring the bike insurance policy while purchasing a second hand two-wheeler
- Not renewing it periodically and allowing it to lapse
- Not preserving the No Claim Bonus option
- Not selecting the correct No Claim Bonus percentage as per the previous year’s policy
- Not declaring the correct IDV value and instead declaring the value lower/higher than the market rate
- Not renewing the policy within the grace period before expiry to avoid the insurance from lapsing
- Not providing correct personal details; this may lead to loss of insurance altogether
- Not declaring a nominee
- Not declaring correct hypothecation details