Now, 3-yr Insurance Covers for Two-wheelers

Two-wheeler owners will soon be able to buy a motor insurance policy for a period of three years. The Insurance Regulatory and Development Authority (Irda) has allowed insurers to launch a long-term cover. Realising the need for comprehensive coverage, the regulator has also asked insurers to file for a three-year term comprehensive policy.

The move will help insurers in cutting down their administrative costs. But experts say insurers will not be able to pass on the benefit to policyholders as premium rates are decided by the regulator. Amitabh Jain, head, motor underwriting and claims, ICICI Lombard, says, "The current guidelines issued by Irda allow companies only to issue third-party long-term twowheeler policies, where the premium to be charged is defined by Irda (tenure X current third-party premium). Thus, the customer benefits as he is not charged for future inflation." 

Insurers will not be able to revise the rates during the tenure of the policy. They will also not be able to cancel the policy in any circumstances except in case of total loss. Tapan Singhel, managing director and chief executive officer, Bajaj Allianz General, says, "It's a welcome move as s two-wheelers on the road are uninsured."

Two wheeler insurance cover has two components-own damage and third-party insurance. While own damage cover protects your vehicle against damage and theft, third-party cover protects losses to a third party. Premium rates for own damage cover were de-tariffed by the insurance regulator in 2007. Third-party premium rates are, however, still regulated by Irda.

Third-party premium rates are revised every year. For 2014-15, the rates have been increased by 20% for private cars and by 10% for two-wheelers. For private cars-with engine not exceeding 1,000 cc-rates were increased from Rs 941 last year to Rs 1,129. For cars with engine exceeding 1,000 cc but not more than 1,500 cc the rates were increased from Rs 1,110 to Rs 1,332.

Source from: http://www.businesstoday.in/moneytoday/perspective/now-3-yr-insurance-covers-for-two-wheelers/story/209936.html