India is a country with one of the largest two-wheeler population. The growth of two-wheeler users is increasing exponentially year on year. It is also the country where according to General Insurance Council (GIC), in 2015 -2016 among the 19 crore registered vehicles 8.26 crore don’t have third party insurance!

Most of these uninsured vehicles were found to be two wheelers – Motor bikes and scooters.

The main reasons that people don’t renew their insurance is

  • The number of times the vehicle needs to go for inspection, waiting in the insurance office or the biggest fear of them all paper work

  • There is the case also where people forget to renew their insurance as they forget the expiration date. Most people only look at it when they plan on claiming insurance when it is too late

  • Then there is also the premium that needs to be paid year on year which also increases if you had any claims that year

  • Financial instability where the two-wheeler owner is not able to get an insurance policy as they don’t have the funds for renewal

To solve all these problems the Indian Regulatory and Development Authority of India (IRDAI) has come up with the long-term insurance policy which covers the vehicle for 3 years.

The main objective of this scheme is to encourage two-wheeler owners to take loans for straight 3 years which solves the problem of forgetting to renew and times of financial losses or instability.

Let’s see how this long-term policy is beneficial

No more “you snore you lose”

One of the biggest problem of non-renewal of two-wheeler insurance policy is the owner forgetting the expiry date. Due to which they just let it go and feel remorse when an accident occurs or the two-wheeler gets stolen.

With the 3-year policy, you don’t have to worry about the renewal for the next 3 years. The only dates you need to remember are the dates that really matter to you.

Money saver

The other big problem with 1-year policies is that each year the premium increases and as the two-wheeler costs depreciate the premium cost appreciate. But with the long-term policy, the premium is going to be the same for the 3 years. This will definitely save you money as some insurance companies also provide discounts for taking 3-year policies.

Avoiding risk

Apart from being legally mandatory to have insurance for your two-wheeler, failing which you will have to pay fine if caught by traffic police, the important reason for an insurance policy is that in case of any accident or theft of two-wheeler – be it third party or for self, will not pinch your pocket at the time of accident or theft of vehicle. Without the policy, the owner has to bear the cost of reparation.

No – claim bonus advantage

In the case of single year policy, the no-claim bonus does not become zero after a single claim. i.e. for example consider 2 policies A and B with A being a single year policy. Both policies will have 20% no-claim bonus at the end of the first no claim year.

Now here is the catch if you have any claim in the second year your short term no-claim bonus will become zero but in the case of long term policies you will at least have up to 20% no-claim bonus depending on the policy issuer.

Easy cancellation

You may think that cancellation of your policy will be difficult or even if you do you will lose the money you paid for the additional years.

That’s not true!

You can cancel your policy if you are not happy with it and the money for the unutilized term will be refunded according to the insurance company norms.


All in all, the long-term policies do seem to have a lot of advantage compared to the short-term ones. If you can spend the premium for the 3 years at one go this could be a potential investment.