Two-wheelers, especially bikes, are undoubtedly the most preferred, convenient, and economical means of transportation to reach a location. Regardless of whether it’s a rural location or a crowded city, bikes can get you anywhere comfortably. And that’s why there is an increasing spike in the usage of bikes with each passing year. As per the latest records, the sale of two-wheelers or bikes in India in the financial year 2021 has crossed 15 million. Thus, you can figure out the popularity of bikes across the nation.
However, with the popularity there’s another important fact that should be taken into consideration. That is, bikes are prone to accidents! And the main reason for it is the poor road conditions in the country. The official statistics report that more than one-third of overall road accidents in India are faced by bike riders. Due to this, The Motor Vehicles Act of 1988 has made it mandate for every two-wheeler or bike to have a third party insurance policy. However, while this requirement is corporated with when purchasing a new bike, it usually gets overlooked at the time of renewal.
So, what happens when you fail to renew your expired bike insurance? Failing to renew bike insurance has its consequences. This blog outlines the various repercussions of having a lapsed bike insurance policy.
What is an expired bike insurance policy?
A bike insurance policy is considered expired or lapsed when you fail to renew it even after the grace period. Insurance companies offer a grace period of 90 days from the policy expiry date, within which you can get your bike insurance policy renewed and retain your accumulated No-Claim (NCB) bonus.
Wondering what NCB bonus exactly refers to? Well, the NCB bonus is nothing but a discount on the bike insurance premium given by the insurer. However, this discount is only offered when you do not make any claim during the entire tenure of the bike insurance policy. To be precise, it can be considered a reward to the bike owner for using the vehicle cautiously.
Now that you have a brief understanding of a bike insurance policy, let’s take a closer look at the repercussions of having a lapsed bike insurance policy.
What are the consequences of having a lapse bike insurance policy?
#1. Loss of NCB Bonus
As already discussed, you can avail of a concession on the renewal premium if you do not register a single claim within the entire tenure of your bike insurance policy. In simple terms, it is a discount offered for not issuing a claim and riding the bike prudently. However, you will be exempted from receiving the NCB benefit if you fail to renew bike insurance past its due date for 90 days. Presumably, the substantial reduction in the policy premium can range between 20%-50% for every consecutive claim-free policy tenure. Hence, avoid failing on the timely renewal of your bike insurance policy and enjoy the benefits of the No-Claim bonus.
#2. Legal Consequences
Bike insurance policies are classified into two types, namely, third-party liability-only bike insurance plans and comprehensive bike insurance plans. The Motor Vehicles Act has made third-party insurance cover for all vehicles a mandatory requirement. The third-party insurance policy covers damages caused by a third person in the event of an accident. However, these legal liabilities no longer fall under the policy cover if your bike insurance plan expires. Also, you may end up paying hefty penalties for not renewing your bike insurance policy.
#3. Lack of Financial Cover
Perhaps one of the biggest impacts of letting your bike insurance policy lapse is the loss of financial safety. A bike insurance policy safeguards you as a rider and your bike from several unforeseen situations such as road accidents, theft, natural calamities, and third-party liabilities. Regardless of having a good track record in past, you will be exempted from availing of the benefits of the financial cover once your policy expires. So, to avoid facing such a consequence, ensure to renew your bike insurance policy on time.
#4. Hefty Penalties
By now you know how important it is to have a bike insurance policy. In India, you should mandatorily have an active bike insurance cover to legally ride your bike on road. Because if you get spotted riding your bike with a lapsed or expired insurance, you will be charged hefty penalties. While in the first instance, you will be charged a fine of Rs. 2000 or imprisonment up to 3 months, in the second instance, a fine of Rs. 4000 or imprisonment up to 3 months will be imposed on you.
Keeping the aforementioned points in mind, it is crucial to ensure that your bike insurance policy is always up-to-date. The repercussions of having a lapsed insurance policy are not just limited to financial consequences; it also leads to increased hassles. Renew bike insurance policy on time to avoid getting exposed to legal and financial liabilities.