Two-Wheeler Insurance for 5 Years: Key Benefits, Types and Impact on NCB

The Insurance Regulatory and Development Authority of India (IRDAI) has made two-wheeler insurance for five years (third-party insurance) mandatory for all new two-wheeler owners.

A two-wheeler is a prized possession for every owner. You want to protect it financially from accidents and theft and also legally comply with traffic laws, as riding without insurance can lead to heavy traffic fines.

Keep reading to explore the key coverage and benefits of a long-term bike insurance policy, like a higher no-claim bonus, lower premium, less stress for 5 years and avoiding insurance challans.

What is Two-Wheeler Insurance for 5 Years?

A 5-year bike insurance is a long-term insurance plan that offers coverage for your bike for a duration of 5 years, providing a comprehensive shield against accidents, damages, and third-party liabilities. Unlike traditional annual policies, a 5-year insurance plan offers extended coverage and benefits at a fixed premium rate, which can help you save on renewal hassles and fluctuating costs.

If you are wondering whether bike insurance is mandatory for 5 years, yes, it is.  According to the Motor Vehicles Act, 1988, all new bike owners must buy 5-year third-party two-wheeler insurance. The IRDAI has mandated it for the following reasons:

1. Reduce uninsured vehicles, such as bikes and other two-wheelers, on the road.
2. Cover damages or bodily injuries your bike might cause to other people or vehicles.
3. Minimises the chances of policy lapse since it is a long-term policy.
4. Comply with road safety and avoid penalties or any legal charges.

Top 5 Benefits Offered by a Two-Wheeler Insurance for Five Years

Buying a third-party bike insurance policy is not just a legal requirement, but also acts as a safety net. It protects you and others on the road. Some of the other reasons to buy bike insurance for five years are mentioned below:

Fixed Premiums

The premium rates of a two-wheeler insurance policy for five years are fixed, so you do not have to worry about annual price hikes. It acts as a hedge against yearly inflation.

For example, if you buy a long-term bike insurance policy, your insurer will determine the premium you will pay for 5 years when the policy starts.

Less Stress for 5 Years

Most bike owners prefer an insurance policy for 5 years because they do not have to stress about the policy’s expiry date every year. It gives them peace of mind. They can also save time, as going through the policy terms and conditions when renewing it is time-consuming.

Higher No Claim Bonus

A No Claim Bonus (NCB) is the discount a bike owner gets when buying a bike insurance policy if they do not file any insurance claim in the last policy year. With a 5-year bike insurance policy, you can expect a higher no-claim bonus.

For example, you can earn around a 45% to 50% discount on a new policy if you buy a two-wheeler insurance for five years but do not make any insurance claim for 5 years in a row.

Avoid Insurance Challan

It is illegal to ride a two-wheeler in India without an insurance policy, and you might get fined. However, you do not have to worry about receipts for traffic violations if you have bike insurance for five years. You do not have to pay fines for insurance-related charges.

Get Discounts on Premiums

Most insurance providers in India provide discounts on premiums when you opt for a long-term two-wheeler insurance policy. This is primarily because the administrative cost of renewing the policy every year is higher than opting for one policy spanning over 5 years. Two more reasons for lower long-term premiums are:

1. Insurance companies consider it to be a guaranteed long-term business.
2. Long-term insurance policies reduce yearly paperwork and operational expenses.

What are the Types of Two-Wheeler Insurance You Can Buy for 5 Years?

The common types of bike insurance you can buy for 5 years are comprehensive cover, third-party cover, standalone own damage cover and compulsory personal accident insurance. It will be easier for you to choose the right two-wheeler insurance for five years if you know about these policies in detail.

Comprehensive 5-Year Insurance

A comprehensive bike insurance for 5 years provides broader protection to bike owners. You will feel financially secure even when riding on Indian roads. You have to make a single premium payment to protect your bike from personal and third-party damage. Some of its common inclusions are:

1. Fire damages
2. In-transit damage
3. Damages caused by accidents
4. Damages caused by natural or man-made disasters
5. Third-party liability for bodily injury or death
6. Third-party liability for property damage
7. Financial loss due to bike theft

Third-Party 5-Year Insurance

It is legally mandatory to have third-party bike insurance when driving on public roads in India. Some insurance companies also offer on-the-spot claim settlement so you can instantly register your claim and get it settled within minutes. The third-party liability policy is a very commonly bought two-wheeler insurance for five years. Some common inclusions are:

1. Third-party liability for bodily injury and death
2. Third-party liability for property damage

Standalone Own Damage 5-Year Insurance

A standalone own damage insurance policy is a comprehensive coverage for your bike against various damages, so you can drive with better peace of mind. The premium amount is calculated based on the policy’s duration, the insured declared value,  engine cubic capacity and vehicle age. Some of its common inclusions are:

1. Fire damages
2. Damages caused by accidents
3. Damages caused by natural or man-made disasters
4. Financial loss due to bike theft
5. In transit damage

Compulsory Personal Accident 5-Year Insurance Cover

Under the Motor Vehicles Act and IRDAI regulations, it is mandatory for every two-wheeler owner driving on Indian roads to have a Compulsory Personal Accident (CPA) cover. Generally, the policy offers better financial coverage as the sum insured is higher. Some of its common inclusions are:

1. Accidental death
2. Permanent total disability
3. Permanent partial disability
4. Temporary total disability

Note: You can purchase additional coverage, such as add-ons like roadside assistance, zero depreciation, and engine protection, from Bajaj General Insurance. The roadside assistance add-on provides you with immediate help 24/7 for emergencies like towing, flat tyres, fuel assistance, and more.

How is NCB Calculated on a 5-Year Policy?

Insurers give you a No Claim Bonus when you ride claim-free. You earn this discount year after year, and it directly cuts your renewal cost. With a 5-year policy, you unlock bigger savings if you avoid claims for the full term. Here’s how your NCB grows:

1. You might get a 20% discount after 1 claim-free year.

2. The discount might rise to 25% after 2 claim-free years.

3. After 3 claim-free years, insurers might offer a 35% discount.

4. The discount might rise to 45% after 4 claim-free years.

5. After 5 claim-free years, you might earn the highest 50% NCB

Let us understand how NCB on two-wheeler insurance for five years can help lower your insurance premium with the example below:

Suppose you buy a new bike insurance policy after 5 years with a premium of ₹3,000. If you have not made any claim for 4 years, you will get an NCB of around 45%.

NCB discount = 45% of ₹3,000 = ₹1,350

Discounted premium = ₹(3,000 - 1,350) = ₹1,650

GST = 18% of ₹1,650 = ₹297

Final premium: ₹(1,650+297) = ₹1,947

8 Points to Consider When Buying Bike Insurance for Five Years

Buying a long-term bike insurance policy can be a bit complicated, as you have to ensure that your two-wheeler is protected with the right 5-year bike insurance policy. Some of the vital points to consider are mentioned below:

1. Coverage Type: Check the coverage of the bike insurance policy, as long-term policies should offer uninterrupted protection throughout the tenure. Look for one that covers third-party liability.
2. NCB Eligibility: If you have bought bike insurance previously, check whether you are eligible for NCB. This will help in lowering the premium of your two-wheeler insurance for five years.
3. Insurer Reputation: Check the reputation of the insurance provider, their customer service, claim settlement process, and reviews to ensure reliable service.
4. Premium Rates: Compare premiums for a 5-year policy with annual plans. Sometimes, a 5-year plan can provide long-term savings, but it's essential to verify if it fits your budget.
5. Exclusions: Carefully read through the exclusions in the policy to ensure that you're not left unprotected in critical situations.
6. Add-ons: Look for optional add-ons such as roadside assistance, zero depreciation cover, or engine protection to enhance the coverage.
7. Renewal Terms: Understand the renewal process and terms, especially regarding NCB transfer, policy extension, and premium adjustments.
8. Claims Process: Ensure the insurer offers a hassle-free and transparent claims process, with provisions for cashless repairs at network garages.

What is the Impact of Buying Long-Term Two-Wheeler Insurance?

Buying long-term two-wheeler insurance, such as a 3-year or 5-year policy, can have several impacts, both positive and negative. Here's how it affects you:

Positive Impacts

1. Lower Premiums: Often, long-term policies come with discounted premiums, which can be more cost-effective in the long run compared to annual renewals.
2. No Need for Annual Renewals: You won’t have to go through the renewal process every year, saving you time and effort.
3. No Claim Bonus (NCB) Benefits: Some insurers offer additional NCB for long-term policies, providing further premium reductions in the future.
4. Fixed Coverage for Multiple Years: Long-term policies lock in coverage for several years, ensuring you're always covered without worrying about policy changes or increases in premiums.

Negative Impacts

1. Inflexibility: If you want to switch insurers or adjust the coverage, you may find it difficult to do so before the policy term ends.
2. Upfront Payment: Long-term policies often require an upfront payment, which might strain your finances.
3. Policy Terms Can Change: Insurers can adjust their terms or premium rates for new policies, meaning you might be paying higher premiums in subsequent years if the insurer revises its pricing model.

Also Read: How To Find Your Lost Two-Wheeler Insurance Documents?

Final Statement

A two-wheeler insurance for 5 years is a better decision if you want convenience and savings. You lock in your premium, skip yearly hikes, and avoid renewal stress for 5 years. It is recommended to choose two-wheeler insurance for five years if you buy a new bike, as third-party bike insurance is legally required in India. For older bikes, pick what fits your budget and riding habits.

Since bike insurance is mandatory, choose a smart and cost-effective option. Visit the Bajaj General Insurance two-wheeler page, compare plans, and pick the cover that protects your ride best.

FAQs

Is 3rd-party insurance enough for a bike?

Yes, if you have 3rd-party bike insurance, it's great for your two-wheeler. However, if you are buying a new vehicle, it is best to opt for a comprehensive package for at least 2-3 years.

Is buying a 5-year policy mandatory for all types of bike insurance plans?

No, buying a 5-year policy is not mandatory. It's an optional choice for those who prefer long-term coverage and want to avail discounts. Annual or 3-year policies are still available.

Do I need to renew bike insurance every year if I buy a 5-year plan?

No, a 5-year policy provides coverage for five years, so no renewal is needed during this period. However, once the policy term expires, you’ll need to renew it for continued coverage.

Which bike insurance policy is mandatory?

While third-party bike insurance is mandatory for all, comprehensive coverage is recommended for additional protection. The insurance term can range from one year to five years.

What is the cost of two-wheeler insurance for five years?

The cost of a 5-year bike insurance policy generally depends on the insurance company you have approached, your bike’s engine cubic capacity and the type of coverage you choose.

Can I transfer the bike insurance policy if I sell my bike?

Yes, you can transfer a 5-year bike insurance policy in the name of the new buyer if you sell your two-wheeler. The buyer has to apply for the transfer within 2 weeks of buying the bike.

Can I cancel a 5-year bike insurance policy before it expires?

Yes, you can cancel a long-term bike insurance policy before it expires by following the below-mentioned steps:

1. Review the policy and contact your service provider.
2. Submit a cancellation request.
3. Return the necessary documents and pay the outstanding fees.
4. Request a refund (if eligible)
5. Receive a written confirmation of cancellation from the insurer.

*Standard T&C apply. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.