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Insurance Article

Single-year or Multi-year: Which Insurance Should You Choose for Your Two-Wheeler?

September 01 2019

As per the IRDAI mandate, multi-year insurance is applicable only for new two-wheelers, and not for renewal of already existing policies

multi year policy

Should you own a two-wheeler, you’d have to purchase at least a third-party two-wheeler insurance policy – as mandated by the Motor Vehicles Act of 1988. Despite the regulation, as much as 75% of two-wheeler owners ride an uninsured vehicle. While some don’t want to invest any further on their two-wheelers, many have trouble remembering dates for renewal.

This is exactly where a multi-year two-wheeler insurance assumes significance. Read on to know more:

What is a Multi-year Two-wheeler Insurance Policy?

While traditional types of two-wheeler insurance policies are designed to cover your vehicle for a single policy year (and warrant immediate renewal annually), multi-year insurance policies allow your two-wheeler to be covered for five consecutive years (5-year TP + 5-year OD) at a time.

Its genesis can be traced back to a Supreme Court directive in 2018 when the apex court had made it mandatory for two-wheeler owners to purchase third-party insurance for a period of five years.

With a multi-year two-wheeler insurance policy, you would not have to renew your plan annually, considering you’d be able to get long-term coverage.

Why is this policy important?

While the number of two-wheelers plying on Indian roads is growing year-on-year, the count of vehicles falling out of the ambit of insurance is on the higher side as well. A recent report released by the General Insurance Council (GIC) revealed that almost 60% of vehicles plying on Indian roads still remain uninsured. Also, most of these vehicles were two-wheelers.

Hence, in a bid to encourage vehicle owners purchase or renew their two-wheeler insurance policy on time, the Insurance Regulatory and Development Authority (IRDA) has now introduced multi-year two-wheeler insurance plan. This step is critical, in keeping with the need to bring maximum two-wheelers within the scope of insurance.

Stated below are some of the advantages of investing in a Multi-year Two-wheeler Insurance Policy:

  • It is convenient

  • A multi-year two-wheeler insurance policy saves you the need to renew your insurance policy every year. Often, it might become a challenge to remember the exact dates for renewal. Importantly, even if you do, you could end up not renewing it on time, considering you might be running on a water-tight schedule and have other pressing issues to attend to.

    In such a scenario, investing in this kind of a policy certainly has its advantages. That’s because it allows you to insure your two-wheeler for five consecutive years in one go, without you having to shoulder the hassles of remembering annual renewal dates.

  • Covers you from implications related to non-renewal

  • As mandated by the Motor Vehicles Act, 1988, riding a two-wheeler without a valid insurance policy is punishable by law. More importantly, should your two-wheeler be involved in an accident (and you don’t have two-wheeler insurance), you’d have to shoulder financial losses that can multiply thick and fast.

    Also, a policy that hasn’t been renewed on lapsation is as good as not having a policy at all. Also, a considerable gap in between policies – also called Break-in policies – can result in a sudden spike in premium.

    That being said, you can steer clear of all these implications related to policy non-renewal by investing in a multi-year two-wheeler insurance policy.

  • Can translate to discounted Own Damage premium

  • Today, most leading insurers are willing to extend lucrative discounts on the premium for Own Damage, in case you consider a multi-year motor insurance policy. That’s because with this kind of a policy, general insurance providers can essentially on-board a customer for a longer period of time.

    That way, insurers end up spending less on customer acquisition and other ancillary activities as opposed to what would’ve been with a standard single-year policy. These savings are often extended to you in the form of discounts.

  • Freezes third-party premium

  • A multi-year insurance policy for your two-wheeler is essentially long term. It is this feature that saves you from abrupt annual hikes in premium for a third-party insurance policy.

    Third-party insurance premiums -- set by the IRDA -- can abruptly increase by as much as 10-15% (on an average) annually. However, with a multi-year two-wheeler insurance policy, you’d stay insulated from such hikes. That’s because the premium you pay at the outset would be frozen for the entire policy period of five years.

  • Offers the NCB advantage

  • With a comprehensive two-wheeler insurance policy, you’d get a No Claim Bonus for each claim-free policy period. Even after policy expiry, most insurers generally extend a 90-day grace period in order to give you the chance to renew your policy and retain the NCB. However, failure to take prompt action within the stipulated period would then invalidate the NCB.

    That being said, with a multi-year two-wheeler insurance policy, you’d not have to keep a regular tab on this, considering the policy would remain in force for five consecutive years. Further, calculation of NCB slabs is different with a multi-year policy vis-à-vis its single-year counterpart.

    All in all, a multi-year two-wheeler insurance policy offers zero headaches, cover from non-renewal-related risks, saving on premiums (for both TP and OD premium) and smooth transfer of NCB.

Related Article:

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