Owing a vehicle, especially your first bike is a special feeling and an experience which one cherishes for all their lives. When you buy a bike, one thing that you have to buy as per law is a third-party liability insurance. This has been mandatory and has to be bought every year without fail as driving without a valid insurance is a crime. With new law and rules, bike lovers have a news which might disappoint them. Sports bikes grow costly as 5-year insurance rule comes up.
The 5-Year Third-Party Insurance Rule for Bikes
The IRDAI or the Insurance Regulatory and Development Authority of India, has announced that with effect from 1st September 2018, all bikes including sports bikes must have a five-year third-party insurance as per law. This means that with this five-year insurance rule, the on-road prices of all bikes will be more expensive for all vehicles bought after 1st September’18.
The displacement of the bike in cubic centimetres or CC will affect the insurance premium for all bikes including sports bike. As per the new law, motorcycles under 75 CC will have an insurance premium of Rs. 1045 onwards for fiver year third-party insurance whereas those from 75 cc to 150 CC will be Rs. 3285. For bikes with a capacity of more than 150 CC and less than 350 CC the insurance cost will be Rs. 5453 and for all bikes which are more than 350 CC will have an insurance premium of Rs. 13034. The regulatory authority has instructed the insurance companies to collect the premium for 5 years at the time of the sale of the vehicle only. With the five-year insurance rule of increased premium of sports bikes, there is no provision to cancel the policy for the term of 5 years unless the vehicle is being sold/ transferred or in the case of double insurance or vehicle not in use anymore in case of total loss. The Supreme Court made this decision and the period of insurance has been increased from 1 year to 5 years.
The mandatory Third-party Insurance Policy
As per the Motor Vehicles Act, third party insurance is mandatory in the country for all vehicles and driving any vehicle without a valid insurance is a crime. Third party liability insurance is the insurance which takes care of any damage or death to any third-party person or property in an accident. Apart from third party, vehicle owners have the provision to take Own Damage insurance which takes care of any loss or damage to the vehicle. The new law has been changed for third party insurance only and thus, it is assumed that there have been no changes made in the law for own damage component of the insurance which can still be bought for a period of 1 year.
The Insurance Regulatory and Development Authority of India has issued notices for all two wheelers like sports bike and also for four wheelers. However, the five-year insurance rule does not apply to cars as they have a three-year insurance rule. The regulator has made it compulsory for all general insurance companies in the country to issue a five-year third-party insurance policy for two wheelers and a three-year insurance policy for cars as a separate product. This can also be a part of the comprehensive insurance product sold to the vehicle owners who are buying a vehicle after 1st September.
As per the law, third-party insurance is mandatory for all bike owners for a period of 5 years. With the five-year insurance rule for sports bikes and other bikes, a long-term package cover can be offered to owners which will have both third party and comprehensive insurance for 5 years. If owners do not want this, they can take third party insurance for 5 years and own damage insurance for one year.
For all the bike lovers who want to buy bikes, they should know that sports bikes grow costly as 5-year insurance rule comes up. The five-year insurance rule has made all bikes including sports bike expensive and thus, the new on road price has to be considered before buying a bike.