Should You Purchase Long Term Two-Wheeler Insurance Policy or Not?

Should You Purchase Long Term Two-Wheeler Insurance Policy

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 that why long term two wheeler insurance policy? What are the benefits of it? Single year policy is better or multiyear?

Research in India provides some facts about the two-wheeler insurance industry which indicates that long term 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 insurance policy for two-wheeler. In today’s scenario most of the companies are providing a multi-year policy.

This is to encourage the two-wheeler owners to have at least third-party insurance. As you may know that as per Motor Vehicle Act Minimum Third-Party insurance is mandatory in India.

What is Long Term Insurance Policy?

Under long term policy 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 options are available for two-wheeler.

You can choose anyone by paying the required premium to the insurance company. Since September 2018 new regulation came into effect. As per this law minimum, five years 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 following benefits you may get for long term policy:

1- It is Convenient

It is very convenient to have long term two-wheeler insurance policy. There are many people who don’t set any reminder for renewal and forget to renew the policy on time.

There may be any other reason also like lack of time, circumstances, budget problem, a communication gap between you and 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 long term insurance policy. You will not have to renew the policy every year if you have long term insurance.

2- Lower Premium

Long term policy may be cheaper than every year renewal basis policy. Insurance company provide extra discount on own damage premium for long term policy.

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 purchase his two-wheeler insurance policy one year back and 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 if he had a long-term policy then his policy was in continuous and no claim bonus was also available. So, it beneficial for NCB rewards also.

4- Protection From Non-Renewal Related Risk

If you are having two-wheeler then 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 long-term insurance policy may safeguard you with these problems.

5- Protection From Price Inflation

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

Third-party premium also increased by regulator some time. But in case you have purchase 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 regular one-year policy you need to pay the renewal premium as per revision in pricing.

How to Calculated 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. It also depends on make, model, cubic capacity, place of registration, previous no claim bonus, etc.

A brief chart of single year and long-term policy

One Year Two-Wheeler InsuranceLong Term Two-Wheeler Insurance
Discount of regular policyMore discount than regular policy
Premium rate may increase on renewalPremium fixed for the long term at the time of purchasing
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 years
Non-renewal related risk is high after one yearThere is no non-renewal related risk after one year

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