Why Is It Mandatory to Have Bike Insurance in India?

  • Author :
  • TATA AIG Team
  • Published on :
  • 05/12/2023

Despite government investments in infrastructure, road accidents continue to show an alarming rise in India. In the year 2022 alone, the fatalities hit an all-time high, with more than 460,000 mishaps that resulted in the loss of 168,491 lives.

These statistics showcase an urgency to employ a holistic approach to curb the factors contributing to these accidents. In this endeavour, a two-wheeler insurance policy plays a pivotal role.

To legally ride on Indian roads, third-party insurance for bikes is mandatory. This rule is in accordance with the Motor Vehicles Act of 1988, and failing to comply with it can result in penalties. There are also several legal consequences if an uninsured bike ends up in an accident. Let’s understand why bike insurance is mandatory in India.

Why Bike Insurance is Mandatory in India

Two-wheelers are the heartbeat of Indian roads, however, riding on two-wheelers also means that you are more exposed (when compared to cars) to threats on the road.

The problematic road statistics show how accidents can happen at any time, which necessitates investing in insurance policies for bikes. The only case where the “bike insurance mandatory” rule does not apply is for e-bikes because they are not categorised under motor vehicles.

Essentially, there are two prominent kinds of bike insurance in India: comprehensive bike insurance and third-party bike insurance. Of these, having third-party insurance for bikes is mandatory to legally ride on Indian roads as it takes care of any liabilities to the third party in case of accidental damages.

Own damage insurance for bikes is mandatory in some countries but not in India. However, without “own damage” coverage, the damages have to be borne from the pocket of the vehicle owner, which can dent their savings. Let’s understand the scope of the types of bike insurance policies.

Insurance Policy for Bike: Types and Definition

Two-wheeler insurance can be classified into three categories based on the coverage they offer:

Third-Party Two-Wheeler Insurance Policy:

As per the Motor Vehicles Act of 1988, every two-wheeler owner in India is expected to have a liability insurance cover.

Under third-party bike insurance, the policyholder is secured against all third-party liabilities. This includes injuries as well as damages to third-party property.

To explain with an example, if you end up in an accident and your bike injures a person and damages their bike. In this scenario, your liability cover will pay for the damages your bike caused to the other rider and their bike.

The “bike insurance mandatory” rule for third-party liabilities secures your finances, ensures you avoid any penalties and promotes safer roads.

Comprehensive Two-Wheeler Insurance Policy:

The comprehensive bike insurance offers all-inclusive financial coverage for your two-wheeler. Not only does it cover third-party liabilities, but it also compensates for the damages incurred by the insured vehicle.

This is more holistic protection as it secures the policyholder against third-party liabilities, takes care of own vehicle damage, and provides personal accident cover for the owner/rider as well as the pillion.

Standalone Damage Two-Wheeler Insurance Policy:

Just like third-party insurance exclusively covers third-party liabilities, a standalone insurance policy for bikes will only pay for damages to the insured vehicle and not cover any third-party liabilities.

Of the aforementioned types of bike insurance policies, the comprehensive cover offers holistic protection while on the roads. Moreover, whether bike insurance is compulsory or not, it is an important element for the wide range of security it offers to riders when on the roads.

How Does a Two-Wheeler Insurance Policy Protect You?

By paying a nominal premium for an insurance cover, the policyholder can claim a reasonable amount for assistance in distressing scenarios.

Here are the two prominent ways where two-wheeler insurance comes in handy:

Legal Liabilities

In the unfortunate event that a third person is injured or their property is damaged owing to an accident caused by you, you are legally liable to pay for the ensuing damages.

To compensate for these expenses, your bike insurance acts as a reliable safety net. It will pay for the damages to the third party on your behalf. In the absence of this coverage, the individual will have to pay for the expenses from their pocket.

Aside from the financial stress of bearing these third-party expenses, the individual will also have to pay the penalty for riding without an insurance cover.

Financial Expenditure

Most financial experts will recommend investing in comprehensive bike insurance because own damage insurance for bikes is mandatory to safeguard your financial health.

A comprehensive cover will secure your vehicle against a range of unfortunate scenarios, such as accidental damage, theft, vandalism, natural or man-made disasters, and more.

Policyholders also have several options to further fortify their security through add-on covers that they can analyse when they buy 2-wheeler insurance online.

This is particularly helpful when you have purchased an expensive bike, as the repairs and replacements can significantly dent your savings.

What is Covered in an Insurance Policy for Bike

The scope of your bike insurance coverage depends on the type of coverage chosen. Although third-party cover is mandatory, it is advised that an individual opt for comprehensive bike insurance for well-rounded protection. Let’s have a glance at what is covered under the two prominent bike insurance policies**-

Third-Party Bike Insurance

The protection offered by third-party coverage is limited

Legal Liabilities**- Under third-party coverage, the policyholder is only secured against potential legal issues arising from damages to a third person or property. Based on the terms and conditions of the policy, financial compensation is offered to the third party.

Comprehensive Bike Insurance

Just as the term suggests, comprehensive coverage offers a more well-rounded protection to the policyholder. In addition to taking care of any third-party liabilities, comprehensive bike insurance also offers the following**-

Any loss or damage to the insured vehicle- Under a comprehensive insurance policy for bikes, the insured vehicle is secured against natural disasters like floods or earthquakes, as well as man-made disasters like riots and terrorist attacks. It also protects the vehicle against fire, lightning, and other accidental damage.

Theft- With comprehensive two-wheeler insurance, the insurance provider compensates the policyholder with the current market value of the bike if it is stolen or damaged beyond repair.

Accidental cover for owner/rider- Comprehensive bike insurance comes with an accidental cover for the owner-driver. Under this cover, any medical expenses arising from the accident are reimbursed. Moreover, the beneficiary receives a sum assured if the owner/driver passes away due to the accident.

Enhanced add-on coverage- With the help of add-ons, you can further enhance your protection under specified circumstances. For instance, a consumables cover will reimburse the expenses of repairing or replacing certain components of the vehicle, such as oil, lubricant, nuts/bolts, bearings, and so on. Or a depreciation cover that protects the policyholder from the reduced value of the parts and ensures the claim payout is unaffected by depreciation costs.

Wrapping Up

Instead of worrying about, “Is bike insurance mandatory?” vehicle owners must try and understand its value. To elaborate, own damage insurance for bikes is mandatory not for saving yourself from penalties (since it is not compulsory by law) but for safeguarding your financial health in case of an unfortunate accident.

Regardless of the type of cover you choose, you can buy 2-wheeler insurance online after carefully comparing coverage options from the comfort of your home. Moreover, when you buy 2-wheeler insurance online, you can get a discount on your premiums.

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Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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