Should You Buy a Long Term Two Wheeler Insurance Policy?

long term two wheeler insurance
Two wheeler insurance

There are two types of insurance options available for two-wheeler insurance. You can take policy for a one-year term and multiyear terms. But the question arises why a long term two wheeler insurance policy? What are the benefits of it?

Research in India provides some facts about the two wheeler insurance industry which indicates that a long term two wheeler insurance policy is an ideal requirement. In India some people do not renew their two-wheeler insurance policy after the first year of the policy. That’s why many two-wheelers are without insurance.

Due to this fact, IRDA allowed the introduction of a long term two wheeler insurance policy for two-wheeler. In today’s scenario, most companies are providing a multi-year policy. This is to encourage the two-wheeler owners to have continuity in policy. As you may know that as per the Motor Vehicle Act Minimum, Third-Party insurance is mandatory in India.

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What is Long Term Insurance Policy?

Under long term two wheeler insurance, you pay a one-time premium for a long-term policy year and your policy continues till the complete tenure. In India, there are 2 Years and 3 years of options available for two wheelers. You can choose anyone by paying the required premium to the insurance company.

Since September 2018 new regulations came into effect. As per this law minimum, five years of third-party insurance is mandatory for a new two-wheeler. Mean if you are going to purchase any new bike then you need to purchase at least 5 years of third-party insurance. If you want to protect your bike also then you should purchase a comprehensive policy.

What are the Benefits of Long Term Two Wheeler Insurance?

If you ask me that should you really buy long term insurance for your bike? The answer is yes. There are the following benefits you may get for a long term two wheeler insurance policy:

1- It is Convenient

It is very convenient to have a long term two wheeler insurance policy. There are many people who don’t set any reminders for renewal and forget to renew the policy on time. There may be other reasons also like lack of time, circumstances, budget problems, and a communication gap between you and the insurance company to not renew on time.

Sudden incidents in breaking periods can give a big financial hit and even legal problems also. It’s better to have a long term two wheeler insurance policy. You will not have to renew the policy every year if you have long term insurance.

2- Lower Premium

A long term two wheeler insurance policy may be cheaper than a yearly renewal basis policy. Insurance companies provide extra discounts on their own damage premiums for long term two wheeler insurance. You may get some additional discount on opting for 2 years’ insurance however this discount can be more in 3 years insurance policy.

You get this discount because you become a customer for 2 years or 3 years for the company. It is a win-win situation for you and the company as well because companies save their administrative cost and other cost related to policy issuance.

3- Intact No Claim Bonus

How you can intact your no-claim bonus? Let’s understand with an example. Mr. Abhishek purchased his two-wheeler insurance policy one year back and the next week renewal was due. But due to his busy schedule, he forgets to renew his policy. After more than three months he finds the time to renew the policy but he got to know that he will not get any bonus.

Even he doesn’t have any claim in the last policy period. He lost his no-claim bonus because he crossed 90 days of the renewal date. Suppose he had a long term two wheeler insurance policy then his policy was continuous and no claim bonus was also available. So, it is beneficial for NCB rewards also.

4- Protection From Non-Renewal Related Risk

If you are having two wheeler then the risk is always associated with it. It can be damaged in an accident or can be stolen by someone. Uncertainty & risk are everywhere and it is not limited to damage and theft of your vehicle only. Any third-party liability may also be arising due to an accident with your two-wheeler.

If you forget the renewal of your policy then you may face any kind of above non-renewal related risk. But a long term two wheeler insurance policy may safeguard you from these problems.

5- Protection From Price Inflation

Directly or indirectly you are saving some premium also. How? Insurance companies do revisions on pricing on a regular basis. Depending on their claim experience in the industry they increase the premium from time to time.

Third-party premiums also increased by regulators some time. But in case you have purchased 2 years or 3 years policy then your premium is fixed for the complete tenure. The impact of an increase in premium will not be on your policy. But for the regular one-year policy, you need to pay the renewal premium as per the revision in pricing.

How to Calculate Long Term Two Wheeler Insurance Premium?

The premium of long-term insurance depends on many factors related to a two-wheeler. It is depending on the coverage you opt for. It also depends on the make, model, cubic capacity, place of registration, previous no-claim bonus, etc.

A brief chart of a single year and long-term policy

One Year Two-Wheeler InsuranceLong Term Two-Wheeler Insurance
Discount of regular policyMore discount than a regular policy
Premium rate may increase on renewalPremium fixed for the long term at the time of purchasing
The policy may get lapsed if not renewed after one yearNot required to renew every year
You can lose NCB if not renewed policy within 90 days of the renewal dateNo chance to lose NCB after one year
Non-renewal-related risk is high after one yearThere is no non-renewal related risk after one year

You may have many benefits from having a long term two wheeler insurance policy. You can also avoid several upcoming problems by having a long term motor insurance policy.

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