While most bike owners spend a lot of time and effort in finding the perfect bike, they don’t think much when it comes to buying motorcycle insurance online that protects their beloved vehicle. The reasons are many – lack of proper awareness about bike insurance, believing that just buying the mandatory third-party liability cover is enough, and underestimating the cost of repairs due to damages/losses from accidents, natural disasters, theft, and man-made disasters. Today, we are going to talk about the process of buying a bike insurance policy and will highlight five crucial mistakes to avoid while purchasing one.
1. Not researching enough
Many new bike owners don’t research the market and tend to buy bike insurance policies recommended by the bike dealer. Hence, they usually end up with the mandatory third-party policy or a comprehensive one that does not fit their requirement. Remember, a bike insurance policy can help you avoid financial losses if there is any damage to yourself or your two-wheeler and a third-party property or person in the event of an accident. Therefore, before buying a policy, ensure that you research the market and compare the policies along with all features and premium rates. This will give you a good idea about the options available to you and help you find the perfect policy.
2. Focusing on low premium rates alone
Insurance is all about protecting yourself from potential financial losses in the future. When you purchase a bike insurance policy, you are protected against damages or losses to you, your vehicle, and a third-party person or property in the event of an accident or a collision. It also offers protection to your bike if the damage or loss is caused by a natural or man-made disaster or theft. The premium rate of an insurance policy is based on the insurer’s assessment of the risk associated with providing the said coverage to you. If you compare policies and find that the premium rates are similar, then it is an indication that the risks associated are high. While you might want to buy a policy with a lower premium rate since it will be easier on your pockets, you must remember that lower rates might imply inadequate coverage. Hence, don’t focus on the premium alone and look for the cost-efficiency of the policy.
3. Choosing smaller deductibles
In bike insurance, a deductible is an amount that you offer to pay towards an insured loss.
Assume that you have a bike insurance policy with a premium of Rs 40,000 and a deductible of 10%. This means that if the bike suffers any damage or loss, you will bear the cost of repairs up to 10% of the total expenses. Beyond that, the insurer will bear the costs. So, if your bike meets with an accident and the total cost of repairs is Rs 12000, then the first Rs 1200 will be managed by you and the balance Rs 10,800 will be paid by the insurer.
There are two types of deductibles in India – compulsory and voluntary. The compulsory deductible amount is mandated by the IRDAI while the bike owner has the option of choosing the voluntary deductible. It is important to choose the deductible carefully since choosing a lower deductible to get the maximum claim amount or a higher deductible to reduce the premium can be counterproductive if not planned well.
4. Not applying for the No Claim Bonus
A No Claim Bonus or NCB is a discount on the premium offered by the insurance company to bike owners who have not filed a claim in the previous policy period. This is offered at the time of buying or renewing a policy. This is a cumulative bonus and can result in a discount on the premium of up to 50%. Many bike owners are unaware of the NCB and fail to avail of a sizeable discount.
5. Not reading the fine print
Like any other financial product, it is important to read the fine print carefully before buying a bike insurance policy. An important aspect that you need to look for is the list of inclusions and exclusions of the policy. This list will tell you about scenarios where the insurer will honour or reject your claim, respectively. You will also get an idea about the claim process and everything else that you need to know about the policy before buying it.
The five mistakes listed above are the most common ones made by people while buying a bike insurance policy. Hence, if you are planning to buy one, then ensure that you learn from other’s mistakes and find a policy that suits your requirements perfectly. Remember, the safer your bike, the lesser the chances of facing a financial loss in the event of damage or loss to the vehicle in the future. Good Luck!