Bike Insurance, Scooter Insurance, Motorcycle Insurance refers to Two-Wheeler Insurance that covers the Insured against damages caused to and from your Two-Wheeler. Liability Policy (Third Party) Insurance is mandatory for all motor vehicles to be roadworthy.

Here is an example to understand the types of Two Wheeler Insurance Cover available in the market. Eg. In an event of a road accident, the parties involved are as follows:

• First Party: The policy holder/ Insured
• Second Party: The Insurance Company
• Third Party: Any person who claims for injury/damages caused by the 1^st Party

In an event where an Insured Person with a Liability only (Third Party) Insurance Policy is held legally liable for injuries or damage done to a Third Party, then his/her insurance company indemnifies the insured person. A Liability only (Third Party) Insurance Cover for the expenses incurred as a result of the following reasons:

• Damages to a Third Party Vehicle
• Damages caused to a Third Party Property
• Injuries caused to other people in an accident.

Following benefits are NOT Covered under the Stand alone Liability only (Third Party) Insurance Policy:

• Cost of damages to the Two-Wheeler or the belongings/accessories in case of an accident
• Cover for losses incurred if your Two-Wheeler or belongings/ accessories are stolen or destroyed
• Coverage against damages to your own vehicle
• Cover for injuries you suffer in an accident
• Pay-out for a replacement if your Two-Wheeler is written off

In order to cover the above and additional benefits, one needs to opt for a Package Policy (Compressive) Insurance Policy. Package policy covers loss or damage to the insured’s vehicle in addition to Liability (Third Party) cover.

Benefits of buying a Package Policy over a Liability only cover are as follows:

• Coverage against damages and losses caused due to accidents, collisions, fires (Explosion, Self Ignition or lightning), burglary, housebreaking, theft, riot and strike, malicious act, terrorist activity, while in Transit (Road, Rail, Inland-waterway, lift, elevator or air), landslide, rockslide, natural calamities such as flood, typhoon, hurricane, storm, tempest, inundation, hailstorm, frost, cyclone, earthquake (fire and shock damage), etc.
• Add on covers such as Zero Depreciation, Return to Invoice Cover, Engine and Gear Box Protection, Consumables Cover, Breakdown Assistance, etc.
• Customization of IDV (Insured Declared Value or Fair Market Value in easy terms)
• Inclusion of Rally cover (Rally extensions may be further extended to include motor racing, speed tests, dexterity trials, hill climbs or motor racing (whether organized separately or included in the course of a rally) by paying additional premium
• Extension of Geographical Area to include countries like Bangladesh, Bhutan, Nepal, Pakistan, Sri Lanka and Maladies by paying additional premium (Such geographical extensions, however, specifically exclude cover for damage to the vehicle/ injury to its occupants/ TP liability in respect of the vehicle during air passage/ sea voyage for the purpose of ferrying the vehicle to the extended Geographical Area)

A package policy does not mean everything is covered; following are a few limitation and exclusion of Package Policy:

• Damages caused due to Normal Wear and Tear
• Depreciation of the value of the Vehicle over time
• Damages and Losses due to a nuclear attack or war
• Depreciation on parts required to be replaced in an accident of the Vehicle (Unless Zero Depreciation add-on cover is purchased by paying additional premium)
• Carriage of Goods (other than samples or personal luggage)
• Hire or Reward
• Organized Racing
• Pace Making
• Speed Testing
• Reliability Trials
• Use in connection with Motor Trade
• Any claims made in a situation where the driver was driving under the influence of alcohol/substance
• Driving without a Valid Driving License
• Consequential Damages (Damages caused after the accident, unless covered for in any add-on cover)
• Add-On Covers not bought

Pricing for Package Policies:

Package Policy Comprises of 2 Sections:

• Own Damage
• Liability (Set by the Insurance Regulator and generally changes every year)

Own damage pricing varies on various factors such as IDV, Zone, Age of the Vehicle, Cubic Capacity of the Vehicle, Make, Model and Place of use of Vehicle, etc.

Zones – For the purpose of rating under this tariff the whole of India has been divided into the following zones depending upon the location of the office of registration of the vehicle concerned:  

Zone A: Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, and Pune.

Zone B: Rest of India.

Discounts on Own Damage Portion of the Package Policy

There are 2 types of discounts under this section:

• No Claim Bonus (Schedule attached)
• Discretion Discount (Varies from Insurer to Insurer based on various factors)

Depreciation on Parts for Partial Loss Claims


The following rates of depreciation shall apply for replacement of parts for partial loss claims in respect of all categories of vehicles / accessories.

• Rate of depreciation for all rubber, nylon/ plastic parts, tyres and tubes, batteries and air bags 50%
• Rate of depreciation for all fiber glass components 30%
• Rate of depreciation for all parts made of glass Nil
• Rate of depreciation for all other parts including wooden parts is to be as per the following schedule

AGE OF THE VEHICLE	% OF DEPRECIATION
Not exceeding 6 months	Nil
Exceeding 6 months but not exceeding 1 year	5%
Exceeding 1 year but not exceeding 2 years	10%
Exceeding 2 years but not exceeding 3 years	15%
Exceeding 3 years but not exceeding 4 years	25%
Exceeding 4 years but not exceeding 5 years	35%
Exceeding 5 years but not exceeding 10 years	40%
Exceeding 10 years	50%

A few key points to keep in mind while taking Package Policy Insurance:

• Opting coverage for both Electrical / Non-Electrical Accessories that have been loaded on top of the Vehicle (Including Rims)
• Endorsing Rally Cover if the vehicle shall be used in in a rally
• Endorsing Geographic Area Extension if the vehicle is being taken to Bangladesh, Bhutan, Nepal, Pakistan, Sri Lanka and Maladies
• No claim bonus stays with the owner in case of sale of vehicle; The same can be used on a New Vehicle bring bought under the same name as the old vehicle within a span of 3 Years from the sale of the Vehicle. (Subject to Presence of Original No Claim Bonus Retention Certificate)
• Transit Insurance is already covered under Package Policy.
• Add On Covers such as Zero Depreciation is very important in order avoid depreciation on parts for partial damage loses
• Compulsory Deductible is mandatory for all kinds of Own Damage claims; try not to opt for any additional voluntary deductibles apart from compulsory deductibles in order to reduce the premium

About the Author:-

Pravin Duseja (Director of Hopebox Insurance Broking Pvt. Ltd.)

+919823052895

Hopebox Insurance Broking Pvt. Ltd. is a technology driven IRDA Licensed Insurance Broking & Advising Firm having its Operations Office in Nagpur with an aim of making Insurance easy and accessible with the help of technology.  Pravin is one of the promoters of the company and has immense knowledge of the Insurance Industry. He is a Licensed IRDA Insurance Broker and expertises in advising the most appropriate Insurances cover to gain maximum benefit and is technically an Industrial Engineer.