A Comprehensive Guide to Two-Wheeler Loan Insurance

A Comprehensive Guide to Two-Wheeler Loan Insurance

Loans by Team Drivio | 5 Oct 2023

Here’s a comprehensive guide to two-wheeler loan insurance that will help you choose the right policy for your new motorcycle. Many lenders offering bike loans bundle these policies to secure both their interests and the borrowers’.

There’s no denying that the thrill of owning your new bike can be irresistible when you hit the road. Whether you love leisurely rides or use it for daily commuting, owning a motorcycle brings joy and convenience to your life. However, amidst all the excitement, it’s easy to overlook purchasing the right motorcycle insurance policy.

 Remember, like any other major investment, owning a motorcycle comes with responsibilities. Having adequate insurance coverage would keep your prized asset secure. In this comprehensive guide to two-wheeler loan insurance, we will discuss what these policies are and the types of motorcycle insurance policies. 

Understanding motorcycle loan insurance

On understanding motorcycle loan insurance and how it works, you can explore different products available on the market. In the first place, let’s understand why you need to cover your motorcycle with a suitable two-wheeler insurance policy.

Also known as bike or motorcycle insurance, two-wheeler insurance is a policy that compensates motorcycle owners and provides financial protection in events like theft, accidents, or damage. It is recommended to adequately insure your motorcycle considering the unpredictability on the road. In case of any unfortunate incident, you can get back to your two-wheeler on the road with minimal disruption.

Types of Two-Wheeler Loan Insurance

In this comprehensive guide to two-wheeler loan insurance, let’s understand the two primary types of two-wheeler loan insurance policies. These include:

Third-party liability insurance

It’s mandatory to cover your motorcycle with third-party liability insurance in India. This type of policy is designed to cover injuries and damages caused by third parties. 

Suppose, you are a part of an accident, injuring pedestrians or damaging other vehicles. In such circumstances, your third-party liability insurance will protect you from financial obligations like compensating the damage, paying for the hospitalization of the affected party, or managing legal expenses. 

Remember, this type of insurance doesn’t cover your injuries or damages to your motorcycle.

Comprehensive insurance

Comprehensive insurance coverage protects your motorcycle from damage. Some of these policies also come with personal injury cover or accident cover to protect the owner. These policies offer a broader range of protection, which makes it highly sought after among motorcycle owners. Comprehensive insurance coverage protects your new bike against theft, disasters, vandalism, or any kind of damage or loss.

Why should you get a two-wheeler loan insurance?

In this complete coverage guide for motorcycles, it’s imperative to explain why it’s wise to invest in bike insurance. Having one of these policies for your motorcycle comes with several perks.

  • Legal compliance: You wouldn’t like to face legal hassles by overlooking the mandatory insurance policy, right? Having such a policy in place ensures that you adhere to the law and at least invest in a third-party liability insurance policy.
  • Financial protection: An insurance policy warrants financial protection against repair costs, damage, or loss for your bike. Besides, it secures your assets against thefts and accidents.
  • Mental peace: Having adequate insurance coverage brings you peace of mind. Knowing that you are financially protected against a variety of perils is mentally gratifying.

Check out this comprehensive guide on two-wheeler loan insurance to understand the provisions for different types of coverage. These policies typically cover the following:

  • Accidents: Following accidents, you can get insurance coverage for the replacement of parts or the repair of your motorcycle.
  • Theft: If your motorcycle is stolen, the insurance company will compensate you for the loss. Considering the value of the motorcycle, it pays to have adequate insurance coverage.
  • Third-party liability: Accidents happen without any intention, but in the end, you need to compensate for the damage or losses you inflict on the other party. Having a third-party liability policy secures you against such unexpected and hefty expenses.
  • Personal accident cover: Remember, hospital bills can burn a hole in your pocket. If you are injured in an unfortunate incident, your comprehensive insurance policy will cover your hospitalization bills.
  • Add-ons: Add-ons or riders bring you additional coverage. These include roadside assistance, zero depreciation, and other perks.

Why do lenders want borrowers to insure their bikes?

Lenders and borrowers share a common interest in protecting the motorcycle. If you are planning to get your new motorcycle financed through a bank loan, you might find your lender bundling an insurance policy along with the loan. Being the lender, they need to secure their investment. When you get a motorcycle loan, the bike serves as the collateral. 

What if the new bike meets with an accident or gets stolen? An accident may also hinder the borrower's capacity to meet loan obligations. Uninsured bikes can lead to a heavy loss for the lender. They prefer borrowers who insure the bikes as it does away with the financial burden on the lender in case of an accident or loss. With adequate insurance coverage, the bank or lender draws its line of defense against unforeseen expenses. This also reduces the chances of default.

Ultimately, having proper motorcycle insurance minimizes risks for both parties. 

Factors Affecting Your Motorcycle Insurance Premium

Several factors influence the premium you need to pay for your motorcycle loan insurance.

  • Model of the bike: The make and model of your motorcycle largely determine the premium you need to pay. High-end and sports bikes often come with higher premiums. 
  • Age and experience: The age and riding experience of the borrower affect the premium. Less experienced and younger drivers need to fork out more premiums.
  • Demographics: Is your area susceptible to vandalism or theft? Or experience high traffic volumes? These factors expose your motorcycle to greater risk, thereby raising the premiums.

Wrapping up

Before wrapping up this complete coverage guide, let’s check out some valuable tips that will help you narrow down your options.

  • Compare quotes from multiple insurers and evaluate the best provisions for coverage.
  • Customize your policy and include necessary add-ons for better protection
  • Renew your policy at the right time to make sure that your motorcycle doesn’t go unprotected

Understanding motorcycle loan insurance and its types, you are now better poised to choose the right policy. Most importantly, obtaining your bike insurance becomes easy with a proper insurance policy protecting your assets.