According to experts, other than the possible discounts on premium, a two-wheeler rider can avoid having to renew the cover every year by opting for a 3-year deal,says Preeti Kulkarni
You will be soon able to buy a motor insurance for your two-wheeler for three years at one go. The Insurance Regulatory and Development Authority (Irda) has recently allowed insurance companies to launch three-year third party motorinsurance policies for two-wheelers. You may be able to buy a comprehensivethree year cover, too, after the insurance companies file their products and the pricing mechanism with the IRDA and obtain the necessary approvals. It may be a while before longer tenure comprehensive policies hit the market.
As per law, vehicle owners must buy third party liability covers, but owning a damage cover (which, along with the third party cover, makes up comprehensive motor insurance) is optional. Saves Trouble & Some Money too “Many policyholders forget to renew their policy on time and they realise this only after they are caught by the traffic police during vehicle checking or in the worst case scenario, after they meet with an accident,“ says Mukesh Kumar, executive director, HDFC ERGO General Insurance. If you have trouble remembering the dates or attending to the chore despitereminders, a three-year policy could be the solution to your problem. “Owners often forget to renew their vehicles insurance on due date on an annual basis. It is estimated that over 40% of motor vehicles, including private vehicles, in India are uninsured,“ says re uninsured,“ says Arvind Laddha, CEO, Vantage Insurance Brokers.
Remember, driving without a third party cover is against the law and you may land in serious trouble if you meet with an accident. Also, it is a cumbersome process to get an insurance cover if you let your policy lapse. “After the lapse of a policy, renewing the insurance is a big hassle since most insurers want to inspect the vehicle to en sure that the vehicle has not met with any accident during uninsured period,“ says Kumar. You could also save on premiums if you buy a three-year third party liability cover at one go. This is because the Irda raises third party insurance tariffs -which are regulated -every year. This financial year, the rates were raised by 20%. This apart, it is likely that insurers will dangle the carrot of discounts to entice two-wheeler owners into buying long-term comprehensive policies, whenever they are launched.
“Premiums could come down as savings on insurers’ administrative costs can be passed on to customers,“ adds Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance. Laddha also says insurance companies will offer either a lower premium rate or better benefits, or both, for long-term policies. “They are likely to do this as they have an assured renewal pool for a longer period,“ says Laddha. No Clarity on No-claim Bonus According to experts, lack of clarity on no-claim bonus (NCB) could be a potential dampener for three year comprehensive motor products. Since NCB translates into direct discounts on premium, it can offset the advantages of buying a long-term policy. Laddha, however, believes that insurers will front-end the NCB in the form of discounts in premiums.
However, before signing up for a three-year comprehensive policy, you should enquire with the insurance company as to how it plans to deal with this aspect. If you are convinced about thevalue that a longer tenure policy brings to the table, you can evaluate products when they are announced.
The procedure for buying such products is unlikely to see many changes. You will have to complete the proposal form, with your personal and vehicle details and furnish relevant documents. The purchase can also be made online, with most insurers offering the facility on their websites.
Source : Economic Times
Date : 20-08-2014