The Insurance Regulatory Development Authority of India (IRDAI) now allows insurance companies to offer an extended policy term for two-wheelers. So gone are those days when your two-wheeler insurance policy needed to be renewed every year!
This strategic decision is aimed at promoting the compulsory third-party liability insurance that is covered in these package policies. Thus, although a long-term two-wheeler policy is not mandatory, a long-term insurance policy aims to cover the financial liabilities of uninsured two-wheelers plying on the Indian roads.
An immediate result of this implementation was observed as ICICI Lombard’s Long Term Two Wheeler policy crossed the 5,00,000 mark. A survey conducted on 936 customers who bought the policy revealed that 80% would prefer renewing their policy for the long term. Also, while 51% would prefer to take a 3-year two-wheeler policy, it was found that 1 out of 4 people wanted even a longer policy term of 4-5 years.
Benefits of long term two wheeler insurance
Let’s have a look at the benefits covered under the long-term two-wheeler insurance plans that triggered such a response towards long-term policies:
1. Convenience
Even though you renew your policy term dutifully every year, you can get the convenience for 2-3 years, depending on your insurance provider, in one go. You just have to pay your premium and enjoy your coverage without having to keep track of policy renewals. A long-term policy, thus, is very useful in case you have multiple policies.
2. Enjoy uninterrupted coverage
When you miss a renewal, there is a gap in coverage during which your vehicle is completely uninsured. In case of an accident or theft, you will have to bear the brunt of the expenses due to damage or loss of the vehicle. In such a case, a package long-term two wheeler insurance plan shines through by providing continuous coverage. What’s more, you are also freed from the hassle of renewing a lapsed policy, tedious paperwork and vehicle inspection, in case a substantial time has passed after the renewal due date.
3. Fixed premium rates
Often, when you renew your policy after one year, you will find a slight increase in the premium due to a yearly hike in third-party premiums as dictated by the regulatory authority. A long-term policy insulates you from such hikes, which are 10-15% on average. The premium is fixed at the time of taking the policy and stays the same for the entire policy period.
4. Discount on own damage
A long-term policy benefits the insurance company due to decreased administration and issuance expenses, thereby reducing the overall cost of their operations. These savings can be passed on to the customers through discounts on the Own Damage premium.
This discount, however, is not offered by all insurance companies and depends on several factors such as policy type, manufacturer, model, etc.
5. Added no claim bonus (NCB) advantage
NCB is a discount that you can avail of if you do not make a claim for an entire policy period. As per the pre-determined slabs, upon renewal, you will get a 20% discount on your Own Damage premium. This discount increases every year at the rate of 5% if you do not make a claim, up to a maximum of 50%.
However, under a long-term policy, this discount rate differs slightly. For example, ICICI Lombard’s 3-year two-wheeler policy offers 40% NCB at the end of three years. It decreases to 30% and 20% if you make one or two claims under your policy term, respectively.
Some insurance experts may refute that a long-term insurance policy fails in case there is a decrease in the premium amount. Although the possibility of such an occurrence is high, a long-term two-wheeler insurance plan proves to be beneficial in the long run in several other aspects, as mentioned above.
Difference between long term and short term two wheeler insurance
Here is how the two wheeler insurance policies compare:
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Feature
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Short Term Insurance
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Long Term Insurance
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Policy Duration
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1 year
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2-5 years
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Renewal Frequency
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Annually
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Once every few years
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Premium Fluctuation
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Affected by yearly rate changes
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Locked-in premium for the duration
|
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NCB Benefits
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Limited to 1 year
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Accumulates over a longer period
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Risk of Lapse
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High if not renewed on time
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Low
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Convenience
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Requires yearly attention
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Set it and forget it
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Short-term policies are best for those who like flexibility or plan to sell their bike soon. But if you are looking for peace of mind, savings and ease of management, long term two wheeler insurance is the smarter choice.
Conclusion
Whether you are a daily commuter or an occasional rider, securing your bike with the right insurance is crucial. Long term two wheeler insurance not only saves you time and money but also ensures that you remain protected against financial and legal risks for years. Say goodbye to annual renewals and hello to worry-free rides with a policy that lasts as long as your journey does.
Still riding with a one-year policy? It might be time to switch gears and go long-term.
FAQs
1. Is long term two wheeler insurance mandatory?
As per the regulations of IRDAI, every two-wheeler owner should buy a long-term third-party policy while making the purchase. While comprehensive long-term plans are not compulsory, they are beneficial and highly recommended.
2. Can I cancel my long-term policy before its term ends?
Yes, most insurers allow cancellations, especially if you sell the bike. The refund amount depends on the remaining policy duration and claim history.
3. Will I still get no claim bonus with long-term insurance?
Absolutely. Long-term policies often offer higher NCB benefits due to extended claim-free periods.
4. How can I buy long-term two-wheeler insurance?
You can buy two wheeler insurance online through your insurer’s website or app by selecting the long-term option during the policy purchase process.
5. What happens after my long-term policy expires?
You will need to renew your policy, either for another long-term or short-term, depending on your preference. Do not wait till the last minute- plan your renewal.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. 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.