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Impact of third party rule on a sports bike

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This blog has been published on June 19, 2020, EST READ TIME: 5 MIN

What is two-wheeler insurance?

Two-wheeler insurance is an insurance policy that is taken to cover your two-wheeler vehicle against damages caused due to any incidents, or natural or manmade calamities.  It is a way of protecting yourself from the financial losses that can arise due to damage to your vehicle or due to death or bodily injuries of the driver/owner.  

Third-Party Two-Wheeler Insurance and Its Importance

According to the norms of the Motor Vehicle Act, 1988, third party two-wheeler insurance is mandatory in India. Third-party two-wheeler insurance helps in covering the financial expenses incurred in case of damage caused to third party vehicles or bodily injuries caused to third party persons in case of the involvement of the insured vehicle in an accident.

Third-party two-wheeler insurance can also be termed as ‘Act only’ policy and it is important due to the below-mentioned reasons.

• Third-party two-wheeler insurance helps in providing cover against legal claims and financial liabilities which can arise due to loss or injuries caused to third party person/vehicle.

• Some accidents can result in very serious injuries and even hospitalisation. The expenses of treatment are high and these medical expenses can be managed by the help of the third party two-wheeler insurance.

• Moreover, third party insurance will bring peace of mind while dealing with hazardous situations which completely depend on finances. So, if you have a third party insurance you can focus on resolving the situation rather than worrying about the finances.

• As mentioned earlier, third party insurance is mandatory in India and so, carrying a third party two-wheeler insurance helps in avoiding paying huge penalties.

The long term third party two-wheeler insurance

The Supreme Court of India has directed the IRDAI to make mandatory rules regarding long-term two-wheeler insurance. Since September 1, 2018, the IRDAI has issued a circular which instructs insurance providers to offer only 5-year third party two-wheeler insurance policies for new two-wheelers. For new two-wheelers, the premium of this long-term third party two-wheeler insurance policy would have to be paid up front. The premium rate of the third party two-wheeler insurance would be specified by the IRDAI at the beginning of a financial year based on the capacity of the two-wheeler.

Premium changes based on cc of bikes

 

With these new regulations happening in the field of third party two-wheeler insurance; there have also been certain changes in the rates of premium of two-wheeler insurance policy depending on the cc of the two-wheelers.

The rate of premium for five-year third party two-wheeler insurance is mentioned below.

• For engine capacity below 75cc, the premium for 5-year third party two-wheeler insurance is Rs. 1,045.

• For engine capacity 75-150cc, the premium for third-party two-wheeler insurance is Rs. 3,285.

• Two-wheelers which have an engine capacity of 150cc-350cc will have to pay Rs. 5,453 as premium for five-year third party two-wheeler insurance.

• Two-wheelers which have an engine capacity above 350cc will be paying Rs. 13,034 as the premium for five-year third party two-wheeler insurance.

So, the premium for long-term third party two-wheeler insurance is directly proportional to the capacity of the vehicle that you are using. Suppose, you are using a sports bike, it will have a high capacity and hence, the long term third party insurance premium would also be high as compared to other normal two-wheelers or bikes.

Hence, it is advisable to purchase your two-wheeler wisely according to your requirements. Your high speed and high capacity sports bike might give you the best of experiences on roads but it will be equally expensive in terms of insurance premium.

This blog has been written by

S. Gopalakrishnan | Motor Insurance Expert | 40+ years of experience in insurance industry

A veteran in insurance industry. S. Gopalakrishnan is a name to reckon with in the field of reinsurance, he has headed the Reinsurance department and has rich experience in other fields of motor insurance. He loves to share his opinion on latest topics in the insurance industry and how he can help people in safeguarding their assets using insurance products.

Mr.S. Gopalakrishnan recommends "HDFC ERGO for your vehicle insurance needs, it has always put customer’s interest at the forefront, with round the clock assistance to deal with emergency breakdown issues and hassle free claims process. You can be assured of complete and reliable guidance through the whole process."

Disclaimer:  The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.