The Motor Vehicles Act, 1988, has made it mandatory for every two-wheeler plying on Indian roads to have a valid two-wheeler insurance policy. These policies are usually offered for a tenure of one year and need to be renewed annually. However, many bike owners tend to miss the date of the bike insurance renewal and still drive their two-wheelers around. This can pose legal and financial risks, as described below.
Understanding the Importance of a Bike Insurance Policy
There are different types of bike insurance policies available:
- Third-party bike insurance policy: It offers coverage from damage caused to a third-party person or property by your vehicle. This is mandatory coverage as per the Motor Vehicles Act, 1988.
- Comprehensive bike insurance: This offers coverage from damage to you, your bike, or a third-party person or property. This is optional coverage.
- Own damage bike insurance: This is a standalone cover that you can purchase along with a Third-Party liability-only policy to get coverage for damage to you or your bike.
Apart from the mandatory aspect, a bike insurance policy that covers you and your bike offer financial protection from damage caused due to an accident, mishap, or disaster. However, these policies have an expiry date and need to be renewed to keep them active.
Failure to do so can result in the lapse of the insurance policy. This means that it will no longer be valid, and you will not be legally allowed to ride your two-wheeler on the roads. Also, it will not offer coverage for any damage.
Usually, insurance providers offer a grace period within which you can renew the insurance policy without losing any benefits. Failure to renew within this period can result in a lapsed policy.
Implications of Not Renewing Your Two-Wheeler Insurance Policy
Here is a quick look at the risks you are exposed to if you fail to renew your bike insurance policy within time:
Since it is mandatory for all two-wheelers to have an active insurance policy, if you don’t renew your policy and it lapses, then you will no longer have valid insurance for your bike. If you are caught, then the traffic department can impose a penalty of ₹2000 and/or imprisonment of up to three months for the first offence. If you are caught for the second time, then the penalty can increase to ₹4000 along with the three months of imprisonment.
- Legal liabilities
When you opt for third-party online bike insurance in India, the insurer offers protection against damage/injuries to a third-party person or property. If you have purchased a Comprehensive Bike Insurance policy, then the coverage extends to you and your bike too.
However, if you do not renew your policy, then it lapses and offers no coverage. If you meet with an unfortunate accident during this period, then you will have to bear all the costs of repair or hospitalisation out of your pocket.
- Loss of NCB
The purpose of buying a bike insurance policy is to receive reimbursement for any costs relating to the repair of the vehicle or physical injury to you or a third party. If you don’t file a single claim in a policy term, then the insurance company has no outgoings, and the premium paid by you is its profit.
When you renew your policy, many insurers offer a discount on the premium for every claim-free policy term. This is called No Claim Bonus or NCB. It is a progressive discount that increases with every subsequent year of not filing any claims. It can go up to 50% of the premium amount. However, if your policy lapses, then you can lose the accumulated NCB discount.
- Hassle of buying a new policy
If your bike insurance policy lapses, then you will have to purchase a new policy. This means that you will have to go through the lengthy process of getting your vehicle inspected by a surveyor and submitting all documents. In addition, if you had accumulated discounts and benefits on your lapsed policy, then you will lose them and might pay a higher premium.
Most insurance companies offer online bike insurance renewals to help policyholders avoid policy lapses and renew their plans from the comfort of their homes/offices. Make sure that you set reminders to ensure that you don’t miss the renewal date. Also, you can consider opting for multi-year online insurance for two-wheelers that offers a policy term of five years. Whatever you do, make sure that you don’t skip renewing your Two-Wheeler Insurance policy in time.