Royal Enfield was the only bike Arun had always dreamt of owning. It was his passion to ride and travel has made him finally become a proud owner of Royal Enfield. The very first thing Arun did was to insure his esteemed possession. Unfortunately, he met with an accident after a few days of purchase. His beloved vehicle was badly injured. He approached his insurance agent who kept on claiming at the time of purchase that the said comprehensive plan offers a complete and 100% coverage. He was shocked to know that he would not be getting a compensation of the entire repair cost!
This is the case with most of us. Most of us opt for a comprehensive two wheeler insurance plan with the understanding that our vehicle is completely protected (100% protection) in the event of loss. We pay attention to know what is covered under the plan. And quite obviously, features are always highlighted in bold. But, we conveniently ignore the terms and conditions, exclusions of the policy which are mentioned in the fine prints as they are loaded with insurance jargons.
What does your two wheeler insurance plan cover?
Whenever you think of buying a two wheeler insurance, you are offered with two main types – third party liability insurance and the comprehensive two wheeler insurance. While the first one is mandatory by law, the later one is the most and strongly recommended by the experts.
- Third Party Liability Two wheeler insurance
It provides you protection against any legal financial loss that may arise due to accident. If your bike hits the third party, you are legally responsible for the loss that is caused to the third party. This particular cover compensates for death, bodily injury and the loss/damage to third party property. However, third party insurance cover does not give any protection to your bike.
- Comprehensive Two wheeler insurance
Comprehensive cover offers three-fold coverage
Protection to your bike: This includes coverage for any loss that may arise due to both natural calamities such as storms, fires, rain, cyclone, earthquake and floods, etc. and manmade calamities such as robbery, collision and loss/damage during the transit.
Personal Accident Coverage: This includes cover for permanent disabilities and death caused due to an accident.
Along with the above two it also provides third party liability cover.
Though it covers almost everything, there are limitations and exclusions to the policy.
- General wear and tear, ageing of the vehicle
- Electrical and mechanical breakdown
- Damage/loss attributable to nuclear risk, war and mutiny
- Contractual losses
- Damage/loss to vehicle which was caused outside the geographical areas as mentioned in the policy document
- Damages caused while driving under the influence of alcohol
- Damages caused while driving without driving license
Exclusions may vary among insurers. One needs to read through the exclusions and each and every clause of the policy before signing the fine prints. Below are some of the reasons why you may not receive the 100% compensation for the losses/damages.
- Compulsory deductible clause: Some of the insurers will have this clause in their two wheeler insurance policy. In this case certain fixed amount agreed already needs to be borne by you, while the rest of the claim will be settled by the insurer. This may result in reduced premium, but will increase your out of pocket expense at the time of claim.
- Depreciation: This is where the settlement takes a hit. Two wheeler insurance policy factors in depreciation for the major parts. 50% of depreciation will be deducted for tyres and tubes and all nylon, rubber or plastic parts and for the batteries. 30% depreciation for fibre glass components will be deducted in most of the policies. Most of the insurers follow depreciation schedule wherein rate of depreciation increases with the ageing of the bike. Insured declared value of your bike is also calculated based on the depreciation.
- Scale of Compensation in Personal Accident Cover: Personal accident cover for the rider is limited to Rs. 1 lakh only. Sometimes the scale of compensation varies according to the nature of injury. Terms and conditions slightly vary among insurers.
To sum it up, it’s important to go for a comprehensive two wheeler insurance plan to safeguard yourself and your valued possession. However, at the same time it’s important to understand the limitations of the policy by carefully reading all the documents before signing on a dotted line.