Buying Two-Wheeler Insurance? Here are the IRDAI Rules for Two-Wheeler Insurance Policies

The IRDAI (Insurance Regulatory and Development Authority of India) is the governing authority in India for the insurance sector. It is a statutory body that manages and regulates the entire insurance sector. It is mandatory for both, the insurance provider and the policyholder, to follow the rules and guidelines prescribed by IRDAI. When it comes to two-wheeler insurance policies, the IRDAI has set a few guidelines so that policyholders are treated fairly by the insurance providers. It is mandatory for all insurance providers to follow IRDAI rules, as it supervises the healthy growth of the insurance sector in India.

Here are the important instructions by IRDAI related to two-wheelers which includes scooters and motorcycles.

Cover for personal accident

• The company has to compensate the policyholder as per the insured amount depending on the severity of the bodily injury that the policyholder has claimed.
• The compensation should be made up to 100% on death unless any specific terms and conditions are mentioned in the policy document.
• In case the policyholder loses one eye or one limb, the compensation for the same is 50%.
• In case of any bodily injury to the policyholder other than mentioned above, which causes complete and permanent disablement, the compensation amount is 100%.

There are specific terms and conditions which applies to this compensation clause.

• There are a number of situations mentioned above; however, only one claim can be made and processed at the same time.
• The total liability of the insurance company cannot exceed Rs. 1 lakh at the time of processing the claim.
• The insured is not qualified to file a claim if the accident is the result of attempted suicide or with the intention of self-harm.
• The sum assured is payable to the nominee or the legal representative of the insured in case of death.
• The coverage is applicable only in case the driver/owner of the vehicle holds a valid driving license.

Exclusions from the two-wheeler insurance policy

As per the IRDAI rules, the two-wheeler insurance policies are not eligible for compensation under the following circumstances. No claims can be made in such cases.

• Driving under intoxication
• Regular wear and tear
• Riding without a valid license, or if the bike’s driven by an underage person
• Use vehicle for Commercial Activities
• An expired policy, consequential damages, electrical and mechanical failure, staged accidents, and driving outside geographical limits are other reasons for claim rejection.

Factors affecting the premium calculation

The primary factors that affect the premium of comprehensive two-wheeler insurance policies are:

• The cubic capacity of the engine
• Age of the vehicle
• Make and model of the vehicle

Insured Declared Value (IDV)

IDV is one of the critical factors to be considered for bike insurance. On the basis of IDV, the sum insured is decided. The IDV is calculated depending upon the market value of the vehicle. Additionally, the cost of side parts and other accessories are also taken into consideration. The rate of depreciation also applies to the IDV. The reduction depends on the age of the vehicle. It is important to note that the IDV holds utmost importance in calculating the total loss.

Rate of depreciation

The IRDAI has clearly defined depreciation rates that need to be considered in case of two-wheelers. The depreciation impacts the claim amount. In simple terms, older the vehicle, lesser is the claim amount one gets.

For two-wheelers that are less than six months old, the depreciation is calculated at the rate of 5%. Once the vehicle crosses six months, the rate of depreciation increases to 15%. After completion of one year, it further increases to 20%.

Depreciation rate for various parts of the two-wheeler

IRDAI has also specified the depreciation rates for various parts of the two-wheeler. The nylon, plastic, and rubber parts are subject to depreciation at the rate of 50% at the time of replacement. 50% depreciation is also applicable to tires, batteries, and tubes. The depreciation is calculated at the rate of 30% for fiberglass. The depreciation is not applicable for glass component.

Transfer of No Claim Bonus from one insurer to another

The IRDAI has explicitly mentioned that if a policyholder changes the insurance provider during the renewal, he or she will not lose out on the no claim bonus.

Third party insurance

The supreme court of India has recently made it mandatory for all new two wheelers to have a third-party insurance policy for a minimum period of five years which is effective from 1st September, 2018.

Documents which need to be kept in insured two-wheelers

The following is the list of documents that need to be present in the vehicle.

• Insurance certificate
• Copy of PUC (pollution under control)
• Vehicle registration copy
• Driving licence

Turn-around time from grievance redressal

IRDAI has determined the turnaround time to make sure that the grievances of are resolved at the earliest and policyholders are not exploited by the insurance providers.

• Grievance acknowledgement: 3 business days
• Grievance resolution: 15 business days
• Insurance, processing, and cancellation of insurance policy: 15 business days
• Settlement of claim: 30 days
• Addendum report for the insurance providers: 15 business days

It is important to keep these points in mind while applying for an online or offline insurance policy for two-wheelers. With these IRDAI rules and guidelines for two-wheeler insurance policies, you will surely be able to choose the best bike insurance, and ride your vehicle in complete peace.