Single-year vs. Multi-year Bike Insurance Policy: Which One to Choose?

In India, it is illegal to ride your bike without a valid third-party bike insurance policy. While these policies offer coverage from damage to a third-party person or property only, you can opt for a comprehensive two-wheeler insurance policy if you are looking for coverage for your bike too.

Insurance for two-wheeler policies has a fixed term for which they are valid. Policyholders are required to renew the policy on or before the expiry date. However, many bike owners tend to miss the renewal dates and risk riding their bikes without valid insurance. This is where a long term two wheeler insurance policy or a multi-year bike insurance policy steps in.

What is a Multi-Year Bike Insurance Policy?

Traditionally, bike insurance policies had annual validities. This meant that once you purchased bike insurance online, it was, by default, valid for a period of one year from the date of purchase. You need to renew your policy every year.

A multi-year two-wheeler insurance policy, on the other hand, allows you to purchase online insurance for a two-wheeler that is valid for two to three consecutive years. Hence, it reduces the risk of your insurance policy lapsing and offers uninterrupted coverage.

Importance of a Multi-Year Bike Insurance Policy

In 2018, The Supreme Court of India made it mandatory for two-wheelers to have a third party liability policy for a period of 5 years. Apart from the mandatory aspect, a multi-year policy offers a range of benefits:

Convenience

If your two-wheeler insurance policy online lapses, then you could attract legal fines and penalties, including imprisonment in some cases. Also, if you meet with an unfortunate accident or collision during this period, then the policy will not cover the costs.

If you miss the renewal date (and the grace period), then you might end up paying more premium for a new policy since you will lose all the discounts and benefits of your earlier policy. Multi-year two-wheeler insurance insures your bike for five years. Hence, you don’t have to worry about remembering renewal dates.

Discounts

Many insurance providers offer discounts on Own-Damage premiums to people opting for multi-year two-wheeler insurance. This is because such policies allow them to onboard customers for a longer tenure and reduces their acquisition costs. Hence, they extend these savings to their customers via discounts.

Fixed third-party premium cost

The premium for third-party liability insurance cover is determined by the IRDAI (Insurance Regulatory and Development Authority of India). Usually, the third-party premium can increase by up to 10-15% in any given year. However, when you opt for a multi-year bike insurance policy, the premium for third-party liability cover is fixed for five years.

NCB Advantage

When you opt for a comprehensive two-wheeler insurance policy online, you get a discount on the premium at renewal for every claim-free policy term. In addition, with a Multi-Year Bike Insurance policy, you don’t have to keep a record of your claims since the policy remains active for five years. Also, the NCB slabs in a multi-year policy are different and more customer-friendly than a single-year policy.

Which One Should You Choose?

If you are purchasing a new two-wheeler, then you have to opt for a multi-year policy for five years mandatorily. However, if you are renewing your existing policy, then you have a choice. While single-year policies have to be renewed every year, they give you the option of assessing the service offered by the insurer and adding/removing add-ons based on your changing needs.

However, you need to renew your policy in time and keep track of your claims. On the other hand, a multi-year policy offers convenience, offers premium discounts, and protects you from the risks of non-renewal.

Summing Up

While single-year and multi-year policies have certain benefits, choosing one should depend on the kind of bike you own and the way you intend to use it. According to certain reports, around 60% of the two-wheelers on Indian roads don’t have a valid insurance policy.

This exposes them to legal and financial risks. While the benefits of a multi-year policy listed above make it a preferred option, if you want to change the plan or provider after considering the service received, then you can look at a single-year plan. Choose wisely. Good Luck!