Why is it Mandatory to Buy a 5-year Bike Insurance Policy When Buying a New Bike?

Most people feel accomplished when they buy a new vehicle. However, before purchasing a new bike or any other two-wheeler, they must comply with the Motor Vehicles Act 1988.

Indian laws mandatorily require vehicle owners to have a valid Registration Certificate (RC), carry complete documents, have a valid driving license, have a Pollution Under Control (PUC) certificate, and have mandatory bike insurance.

Not having the above documents can lead to significant fines and penalties. Here, let’s uncover the insurance policy requirements that you should have, especially when buying a new two-wheeler.

Which Insurance is Mandatory When Buying a New Two-wheeler?

A 5-year third-party bike insurance policy + 1-year own damage cover is mandatory when buying a new two-wheeler in India. It covers damages caused to other vehicles or individuals in an accident involving your two-wheeler and the damage your vehicle has suffered.

The mandatory 5-year third-party bike insurance policy, along with 1-year own damage cover, ensures that your vehicle remains insured for a longer period, reducing the number of uninsured two-wheelers on the roads.

However, what led to the introduction of such a policy?

Why and When Was This Policy Introduced?

This policy was introduced by the Insurance and Regulatory Development Authority on 1 August 2020, considering the significant rise in the number of accidents involving two-wheelers. This ensured that more two-wheelers were insured and lowered the number of expired or lapsed bike insurance policies.

How Does This Policy Work?

When purchasing a new bike or two-wheeler, you are required to buy a 5-year third-party insurance policy and a one-year own-damage liability insurance policy. The third-party liability policy covers any accidental expenses to a third party, while the damaged part covers your vehicle against damage.

After the first year, you only need to renew the ‘Own Damage’ portion annually, while the 5-year Third-party Plan remains valid. The mandatory 5-year + 1-year policy structure ensures continuous third-party coverage while allowing flexibility for your own damage coverage.

Are You Required to Renew ‘Own Damage’ Part Once it Expires?

While it is beneficial to renew the ‘own damage’ part once it expires, it is not a legal obligation to renew the ‘own damage’ part of the insurance policy.

However, renewing the third-party bike insurance coverage to comply with the law and avoid potential penalties is essential.

Are You Required to Renew Third-Party Insurance Once It Expires?

The law mandates renewing third-party bike insurance coverage once it expires. The renewal is important to ensure compliance with the law while compensating for any loss from an accident to a third party.

Since new vehicles are mandatorily required to have a 5-year third-party bike insurance cover, you will need to renew your third-party bike insurance from the 6th year onward to avoid any penal consequences.

Where Can You Purchase the Insurance Policy for a New Vehicle?

Many new vehicle buyers wonder where to buy the mandatory insurance policy. Nowadays, most two-wheeler dealers offer the facility to purchase insurance directly. However, you can also buy bike insurance online from any insurance service provider.

It is a convenient method, and you can buy insurance in the comfort of your home after comparing each policy’s different covers and features.

In a Nutshell

When purchasing a new two-wheeler, it is mandatory to buy a 5-year insurance plan as per the regulations of IRDAI. This ensures compliance with the law and has a safety net in case of accidents. Once the 5-year policy expires, renewal is necessary to maintain continuous coverage and legal compliance.

As a safety measure, you should always strive to have a comprehensive vehicle insurance policy. This ensures that you have third-party bike insurance protection and can curb losses due to vehicle damage in case of accidents.

While the above insurance plans are the minimum insurance requirements, it is not mandatory to only buy the above bike insurance.

You can also opt for comprehensive insurance plans if you need extensive coverage and all-around protection. These ensure that you stay protected from financial losses from accidents.

Bring your dream bike at home now (but with an insurance safety net!).