What are the terms used in bike insurance?

What are the terms used in insurance?

Understanding your policy gives you the edge during claim settlement. It becomes easier to understand the process.

So, here is the list of some of the essential terms of a bike insurance plan:

1. Coverage Types
   OD or Own Damage
   Protect your own bike against damages caused by accidents, theft, fire, or natural calamities.
   For example, suppose your vehicle gets damaged in an accident. In that case, this insurance plan provides coverage, thereby reducing your overall out-of-pocket expenses in case of a claim.
   
   TP or Third-Party
   A mandatory cover, Third-Party (TP) covers liabilities for damages or injuries caused to a third party or their property.
   For example, if your vehicle damages any other vehicle, property or person, you are legally liable to pay for the same. This insurance plan provides coverage against all legal liabilities.
   
   Comprehensive Coverage
   Combines OD and TP coverage for all-around protection, including optional coverage through add-ons.
   So, this type of insurance plan covers all legal liabilities covered under a standalone third-party bike insurance plan, along with coverage for your own vehicle under a standalone own damage insurance plan. It's a comprehensive coverage for both types.
   
   In case you are wondering who the second party insurance in a bike insurance plan is, it is the insurer or the insurance company that is providing the coverage.
   
   Note: For a new bike, you need to purchase a minimum of 5 years of mandatory third party bike insurance plan. The own damage coverage is optional. But if you do not want to risk your own bike and wish to get the same repaired without much pinch in your wallet, you need to opt for a comprehensive plan. So, if you opt for a 5+1 Bundled Bike Insurance Plan, you will get 5-year third-party coverage for your bike along with one year of own damage coverage.
   
2. Premium
   One of the focus terms of an insurance plan is its premium. It is a crucial element for both the insurance provider and the bike owner. Premium simply refers to the amount charged in return for a bike insurance policy. Your 2 wheeler insurance provider assures you to provide protection against certain mishaps with your bike. In return, they charge a premium amount.
   
   You typically pay a premium yearly. The premium depends on your bike's make, model, and variant, as well as factors like the type of bike insurance and insurance provider you choose.
   
   Tip: At Jio Insurance Broking, you can effortlessly compare the available plans in detail. This user-friendly platform allows you to explore premium options from multiple insurers, helping you easily make a well-informed choice.
3. Cover
   A common term you may come across in almost all the pages of a bike insurance policy is the cover. Cover refers to the maximum monetary assistance your insurance company will provide in certain conditions. There may be different cover limits for personal accidents, loss of the bike, theft, etc. To learn specific cover, you need to refer to the policy documents.
   
4. IDV
   IDV, or Insured Declared Value, is a key component of any 2 wheeler insurance plan and is determined by various factors.
   The Insured Declared Value represents the maximum compensation your insurer will provide in case of your bike’s total loss or theft. If your bike becomes unusable, you can file a claim. After deducting any excess or deductibles, the insurer pays the remaining IDV amount to the bike owner.
   
5. Zero Depreciation
   Depreciation is the term for the decreasing value of a bike as it ages. As your bike ages, the market value of your bike and certain bike parts decreases. Thus, this is commonly termed depreciation in bike insurance policies.
   
   When settling a claim, your insurance provider will calculate the depreciating value of the bike and deduct the same from the claim amount. So, the depreciation value can make a big difference in the sum amount you receive.
   
   Tip: To avoid deduction of the depreciation value at the time of claim settlement, you may purchase a zero depreciation cover. With zero dep cover, your insurance can no longer deduct the depreciation value from the claim amount, thereby reducing your out-of-pocket expenses when your own bike gets damaged.
   
6. NCB: No Claim Bonus
   Your bike insurance providers appreciates a bike which is continuously secured. If you do not raise any claim during a policy year, the bike insurance company rewards you with a no-claim bonus.
   
   The no-claim offers you exciting discounts when you renew your bike insurance policy. You may get up to 50% premium discounts with no claim bonus.
   
   Did you know no claim bonus is a transferrable reward? If you have accumulated NCB but are willing to change your insurance provider or buy a new bike, you do not lose out on the NCB. It can be easily transferred.
   
7. Exclusions
   A bike insurance plan may not be able to cover every condition. In a few situations, damages remain out of the reach of an insurance plan. These are termed exclusions. Some of the conditions usually uncovered are riding a bike without valid insurance, drinking and driving, illegal racing, etc.
   
8. Add-ons and Riders
   Add-ons are additional coverage that you may purchase along with the base policy. Common add-ons include zero depreciation cover, no claim bonus protection, roadside assistance, return to invoice, engine protection cover, etc.
   
9. Deductibles
   Deductibles are the amount of claim that the policyholder/bike owner has to pay. For example, if the deductible is set at ₹2000, then at the time of claim settlement of, say ₹25,000, you will pay a minimum of ₹2000, while your insurance provider will pay the amount above ₹2,000, i.e. ₹23,000.
   
   There are two types of deductibles:
   Compulsory Deductibles
   IRDAI sets compulsory deductibles. It is ₹100 for bikes under 150 cc, and those above 150 cc have to pay ₹200.
   
   Voluntary Deductibles
   The insurance company sets it. The higher the deductible you choose, the lower the premium, and vice versa.
   
   Did you know IRDAI (Insurance Regulatory and Development Authority of India) regulates the motor vehicle insurance industry in India? It manages third-party policy premium rules. Individual insurance providers lay out comprehensive and standalone policy terms.
   

Conclusion

A bike is one of the most preferred modes of transportation. Be it for rides inside the city or for long drives, two-wheelers are quite flexible. If you are also planning to buy the best bike insurance in India or you already have one, make sure you are up to date with the formalities like a bike insurance plan. Along with owning a two-wheeler insurance, make sure to have a 360-degree understanding of the policy to avoid unnecessary claim delays.

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