5 MinsApril 7, 2022
Anand Ramakrishnan is planning to buy a new bike. While he knows that he should buy motor insurance, he is wondering if he should pay the higher premium for a comprehensive cover or save money by buying only the mandatory third-party cover?
Many of his friends and acquaintances have advised him against spending more money on the comprehensive motor cover and instead buy only the limited third-party cover. They argue that since a two-wheeler does not cost as much to maintain as a four-wheeler, there is no need to pay a higher premium for a comprehensive cover. What should Anand do?
While a third-party motor cover is mandatory by law, Anand should ideally buy a comprehensive motor policy. Let us see why.
High incidence of accidents involving two-wheelers: According to government statistics, over 4.5 lakh accidents take place on Indian roads -- the worst such record in the world. Two-wheelers accounted for over a third of this number. While Anand does not indulge in rash driving, such stark numbers mean it is better to be extra cautious and be prepared for any eventuality.
Limitations of Third-Party Cover: A third-party insurance cover, by definition, only protects the insured person from financial liability towards death/disability to a third party or loss or damage by the insured vehicle to property of a third party. It does not offer protection in case of any damage to Anand’s bike or if he sustains an injury.
[Also Read: Know how your Motor Insurance protects your car and you!]
Advantages of Comprehensive Insurance Cover: A comprehensive insurance policy, on the other hand, offers the following benefits:
- Covers damage to the insured vehicle – this means that repairs to the bike won't burn a hole in Anand's pocket in case of an accident
- Insures the vehicle against theft
- Includes personal accident insurance, which will take care of medical expenses in case Anand is injured in an accident
- Ability to have Add-ons for accidental death, break down assistance, engine and gear-box protection, among others.
Marginal difference in cost: Anand did some research and found out that the price of a third party cover for the bike he was buying was around Rs. 3,000, while that of a comprehensive cover including add-ons was Rs. 3,700. The difference between the two was marginal and if he factored in the advantages of a comprehensive cover, not opting for one would be being penny-wise and pound foolish.
Anand’s decision to buy the comprehensive motor insurance for his new bike will hold him in good stead and save him from unnecessary stress, going ahead. He can check out motor insurance offered by Axis Bank, which offers two-wheeler insurance jointly with Tata AIG General Insurance. Know about the plans online.
Disclaimer: The Source, a Mumbai-based content creation and curation firm, has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.