IRDA rules for two-wheeler insurance explained

IRDA (Insurance Regulatory and Development Authority of India) is the apex authority that deals with the insurance-related rules and regulations. From introducing new rules to deciding the premiums for insurance, an individual gets all the right information through IRDA.


Rules for calculation of depreciation are set by IRDA and are mentioned in the Insurance Regulatory Development Authority (IRDA) guidelines.

Following are the percentage of depreciation applied in the various parts:

  1. As mentioned in the two-wheeler insurance policy, depreciation for fiberglass components is 30%
  2. 50% depreciation is given for parts made of rubber, nylon or the tubes and tires.
  3. Glass parts are charged with no depreciation.
  4. Metal parts are charged as per the depreciation mentioned in the policy.

IDV plays an essential role in deciding the premium of the two wheeler insurance policy.

IDV is the current value of a vehicle and the sum assured amount significantly depends on it.

Following are some important points to look up to:

  • Rate of depreciation applies to the IDV too.
  • It is based on the age of the vehicle.
  • IDV is also treated as the main price in calculating the total loss, hence it is extremely crucial.
  • Personal Accident Cover or Owner Driver

IRDA‘s latest amendment states that the limit of compulsory personal accident cover for two-wheeler insurance is increased up to Rs.15 lakh. The rules are applicable for policies, comprehensive and the third party liability cover. It covers accidental death, total disability, partial disability or temporary total disability due to an accident.

Basic principles of the policy are:

  1. During an accident, the insurance provider indemnifies the insured as per the pre-decided amount depending on the severity of the injury the holder has suffered.
  2. The scale of compensation regarding death is 100%, unless some specific terms and conditions in the policy document are not followed.
  3. The scale of compensation is 100% if the policyholder loses both limbs or in the case when there is a loss of one limband one eye.
  4. If the insured loses one eye or one limb, the insurer will compensate for the loss of up to 50%.
  5. Other than the above injuries if any other injuries cause total disablement of the policyholder then 100% compensation is inevitable.

Following are the terms and conditions used to settle a claim:

From the situations mentioned above, an individual can claim for only one condition at a time.

  1. At one time of processing the claim the total liability of the company cannot be exceeding Rs.15 lakh.
  2. If the accident is due to self-harm, attempted suicide or even a physical defect then the policyholder is not eligible to file a claim.
  3. If the driver is under the consumption of toxic substances like drugs or alcohol then the policyholder cannot file a claim.
  4. The sum assured is payable to the nominees or legal representatives of the insured person.
  5. Coverage will not be provided if the owner does not hold a valid driving license.

Following are the types of two-wheeler insurance policies:

  1. ‘Liability Only’ insurance policy is also known as ‘Third Party Insurance for Bike’ policy. This policy is mandatory in India by Motor Vehicles Act, 1988. It covers death, loss or property damage to a third party due to an accident.
  2. Comprehensive insurance policy is the package policy that covers everything from ‘Liability only’ insurance policy and additional coverage for damage or theft of two-wheeler.
  • Own damage policy covers damages that are caused by :
  1. Natural calamities like floods, earthquakes, fires, etc.
  2. Manmade disasters like theft, burglary, terrorist activity, etc.
  3. Accidents caused by external means.
  4. Damages caused while traveling through air, road, rail or water.

Under the IRDA guidelines, the comprehensive two-wheeler insurance policy covers the insured vehicle under the following situations:

  1. Any loss or damage due to man-made calamities like theft, strike, riot, etc.
  2. Damages caused because of natural disasters such as floods, hurricanes, earthquakes, fires, etc.
  3. Damages caused due to an external accident.
  4. Personal accidents cover the amount up to Rs.15 lakh for various vehicles.
  5. Liability of any damage, injury or death caused to a third party.
  • Conclusion

You ought to know the above-mentioned guidelines as a two-wheeler insurance policy buyer. Your motor insurance policyhas a general set of guidelines, it is also essential for you to check the policy document to familiarize yourself with these terms and conditions. The given terms and conditions are formulated by keeping the safety of the insured in mind.