If you own a bike or scooter, you will 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 in their two-wheelers, many have trouble remembering dates for renewal. It is illegal to drive without a motor insurance policy. Hence, having an insurance policy for your vehicle is highly important.
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 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 made it mandatory for new two-wheelers to have third-party insurance for 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 to purchase or renew their two-wheeler insurance policy on time, the Insurance Regulatory and Development Authority (IRDA) has now introduced a 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.
Pros and cons of a single-year insurance policy
Given below is a list of benefits and drawbacks of opting for a single-year insurance policy-
Pros:
- Lower upfront premium
- Flexibility to switch insurers each year
- Easier to reassess needs annually
- Option to change add-ons yearly
Cons:
- Annual renewal requirement
- Risk of policy lapse if missed
- Subject to yearly premium hikes
- Loss of NCB if not renewed on time
Pros and cons of multi-year insurance policy
Here are the positives and negatives of having a multi-year insurance plan-
Pros:
- It is convenient
- Covers you from implications related to non-renewal
- Can translate to discounted Own Damage premium
- Freezes third-party premium
- Offers the NCB advantage
Cons:
- Higher initial premium
- Limited flexibility to change insurers or coverage
- Refund complications on policy cancellation
- Less responsive to changing bike usage needs
Differences between single-year and multi-year two-wheeler insurance
Here is a comparison between single-year and multi-year bike insurance policy:
|
Feature
|
Single-year Policy
|
Multi-year Policy
|
|
Duration
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1 year
|
2 to 5 years
|
|
Premium
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Paid annually
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Paid upfront for the entire term
|
|
Renewal frequency
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Every year
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Once in 2–5 years
|
|
NCB retention
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Yearly reset
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Protected over a longer period
|
|
Flexibility
|
High
|
Moderate
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Factors to consider before choosing between single-year and multi-year policy
Keep these points in mind before choosing two-wheeler insurance:
- Budget: Do you prefer a lower annual expense or are you comfortable with a higher one-time payment?
- Bike usage: If you plan to sell your bike soon, a single-year policy might make more sense.
- Discipline: Are you likely to remember renewals on time?
- Discounts and offers: Some insurers offer attractive deals for multi-year plans.
- Insurance history: A clean record with consistent NCB might benefit more from a long-term policy.
How premium rates differ in single-year vs multi-year policies?
Premium rates in single-year policies are subject to annual revision by the Insurance Regulatory and Development Authority of India (IRDAI), especially for third-party coverage.
In contrast, multi-year two-wheeler insurance allows you to lock in the premium at current rates, shielding you from any increase in third-party insurance charges for the duration of the policy.
This can result in significant long-term savings, especially if insurance rates continue to rise annually.
Tips to save on two-wheeler insurance premiums
These tips will help you save on your insurance premium payments:
- Opt for multi-year coverage to avoid future rate hikes.
- Compare insurers online to find the best value.
- Install anti-theft devices for possible premium discounts.
- If possible, pay for small repairs on your own and avoid making frequent claims to protect NCB.
- Bundle policies if possible, some insurers offer discounts when you insure multiple vehicles.
- Choose the right IDV (Insured Declared Value), not too high or too low.
Importance of renewing two-wheeler insurance on time
Failing to renew your two-wheeler insurance on time has several consequences:
- You lose the NCB you’ve accumulated
- Your vehicle becomes legally uninsured
- You may face penalties if caught riding without valid insurance
- A lapse may require a bike inspection before issuing a new policy
Whether you choose comprehensive bike insurance or a basic third-party cover, timely renewal is non-negotiable.
Conclusion
Choosing between single-year and multi-year two-wheeler insurance depends on your budget, convenience and coverage needs. Multi-year policies offer long-term savings, protection from premium hikes and reduced renewal hassles. On the other hand, single-year plans provide flexibility and are easier to switch. Evaluate your priorities to select the option that best suits your riding and financial habits.
FAQs
1. Is multi-year two-wheeler insurance compulsory?
No, it is optional. However, IRDAI has made 5-year third-party insurance mandatory for new bikes.
2. Can I cancel a multi-year policy and get a refund?
Yes, but the refund depends on the insurer’s terms and whether a claim has been made.
3. Does multi-year insurance offer better NCB benefits?
Yes, since your NCB is protected for a longer duration.
4. Can I switch insurers with a multi-year policy?
Not until the policy term ends, unless you cancel it and buy a new one.
5. Is comprehensive bike insurance available for multi-year policies?
Yes, one can purchase third-party and comprehensive bike insurance for multiple years.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.