With an insurance coverage for your two-wheeler, you are not only abiding by the letter of the law, but also protecting yourself from a host of headaches associated with inadequate or zero protection in case of a road accident.
Why the need for long term insurance?
It is reported that many two-wheelers running on the road are uninsured. To bring down this unfortunate statistic, insurance companies have now started long - term insurance policies that offer coverage to your bike for 2 years and 3 years. With this move, it aims to bring a much bigger percentage within the insurance coverage net.
Comparing (annual) policy with long-term policy
1. Lapsed policy
An annual policy stands 3x the chance of going into policy lapse mode as compared to a three year policy. This means that chances of facing troubles to reinstate a lapsed policy will also increase three-fold for a policy. For a lapsed policy the below steps are taken by the insurance company
- Thorough scrutiny of the bike
- Determining the IDV of the bike to come up with the premium amount
- Preparing paperwork for reinstated policy cover
- Dispatch of new/reinstated policy document
For a lapsed policy, the premium may be high or the IDV value may be kept low. This puts you as a customer, at a disadvantage.
2. Premium amount
For a policy, the premium amount will keep rising every year as per IRDAI regulations. For a long-term policy the amount will remain stable and fixed for as many as three years continuously. Additionally, since you will be going for a long-term plan, the company may offer additional discounts to sweeten the deal.
3. Renewal dates
For a policy you need to diligently follow the due date every single year and make sure you have the amount ready by the time your due date arrives. However with a hectic life and stressed out schedules, it may happen that you forget to renew the insurance on time. This may lead to additional headaches of rushing to complete extra formalities of bringing a lapsed policy back to life. It can be rightfully said that a long-term insurance provides better peace of mind than an annual insurance.
4. NCB benefits
Imagine if A opts for insurance and B opts for long-term insurance. If a claim arises in 2nd year, then in the 3rd year A (insurance) gets 0% NCB benefits, while B (with 2 year long-term insurance) gets 20% NCB benefit. The below table will compare the NCB % outline for each of the type of insurance:
| Annual insurance (1 year) | Long term insurance (2 years) | Long term insurance (3 years) | |||
| 1 year of no claims | 20% | ||||
| 2 continuous years of no claims | 25% | 2 continuous years of no claims | 30% | 3 continuous years of no claims | 40% |
| 3 continuous years of no claims | 35% | 1 claim in two year policy | 20% | 1 claim in three year policy | 30% |
| 4 continuous years of no claims | 45% | More than 1 claim in two year policy | 0% | 2 claims in three year policy | 20% |
| 5 continuous years of no claims | 50% | More than 2 claims in three year policy | 0% |
Our recommendation is to go with a long-term two wheeler insurance policy. This way you will have fewer renewal dates to remember and enjoy coverage for a longer period of time and that too at stable premium rates.