What is the Grace Period in a Bike Insurance Policy?

When you buy a bike insurance policy, the insurer requires you to pay a yearly premium to offer continuous coverage against accidents, fire, or and theft. You will lose the coverage benefits if you miss the premium renewal due date. However, sometimes, due to delayed salary credit, technical glitches, or meeting some unavoidable liabilities, you are unable to renew the policy on the due date. After accounting for these events, the insurers incorporated a ‘Grace Period’ clause into comprehensive bike insurance plans.

What is the Grace Period?

The grace period refers to an additional window of time provided to policyholders after the official expiry date of their insurance policy. This period typically extends for 30 days after the policy’s expiry date, but some insurers offer longer grace periods.

If you renew the policy within this period, you don’t have to worry about losing continuity benefits or facing increased premiums. However, remember that driving with an expired policy within the grace period does not mean the insurer will reimburse you for any events covered by the policy.

Implications of Not Renewing the Bike Insurance Within Grace Period

If you fail to renew your bike insurance plan on time, you could face the following implications:

1. Legal Consequences 

In India, rules and regulations related to traffic and road safety are outlined under the Motor Vehicles Act. One such rule mandates that you can only ride your two-wheeler on Indian streets if it has third-party liability coverage. That means if, while riding your bike, you accidentally hit and injure a pedestrian or damage a third-party property, your policy should be able to compensate for the losses.

If you are found driving with lapsed insurance, the penalty will be Rs Rs 2,000 or three months in prison, depending on the severity of the road mishap. With a repeated offence, you may face a fine of Rs Rs 4,000 with or without imprisonment.

2. Loss of Continuity Benefits 

When you do not raise any claims during the policy year, the insurer rewards you by reducing your premium at renewal. The premium discount varies from 20% to 50%. For example, if you have submitted no claims in the first year of your policy, the premium discount is 20%. For two consecutive years without a claim submission, the discount increases to 25%. Similarly, you get an NCB (No-claim Bonus) reward of 50% for five successive years of skilled driving and making no claims.

However, if you fail to renew your policy within the grace period, all the NCB you have earned throughout these years will lapse.

3. Inspection

Renewing bike insurance within the grace period requires you to visit your insurer’s website, provide the basic details of your motorbike along with the existing policy number, and make an online payment. Once you follow these steps, the insurer will issue the policy. and dispatch it to your registered mailing address.

However, the renewal process becomes more complex if you do not renew within the grace period.

The insurer will send a surveying officer to assess the bike’s current condition. They will ask you to provide a complex set of documents, such as the service record book, to check if you have taken your bike to a service centre for any major repairs. If they find any major damage, be prepared to pay a higher premium.

Tips to Prevent Your Bike Insurance from Lapsing

You can take the following four steps to ensure you never miss out on timely renewals.

1. When you receive emails from your insurance company, take the time to read them. These messages often contain essential information about policy renewals, grace periods, and benefits. 
2. Opt for online renewal over offline methodsYou can renew your policy online as well as offline. Choose a renewal method that is convenient for you. It is convenient and efficient and reduces the chances of missing the grace period. Moreover, you can complete the process from your home or office. 
3. Insurance companies often offer services like SMS or email reminders. Sign up for these alerts to stay informed about the due date for renewing your bike insurance policy. 
4. Consider opting for long-term bike insurance with coverage spanning three years. This option provides two main advantages. First, it saves you the hassle of renewing your policy every year. Second, it can lead to cost savings on premiums. The insurance regulator, IRDAI, reviews and potentially raises third-party insurance premiums annually. With a long-term policy, you are protected from these possible price increases. 

Conclusion

A grace period in bike insurance provides a crucial extension after the policy’s expiry, usually up to 30 days, to renew without losing benefits. This helps manage unexpected renewal delays. However, renewing within this period is vital to avoid legal issues, loss of continuity benefits, and the hassle of a detailed inspection. To prevent lapses, consider online renewals, read insurer communications, use reminder services, and opt for long-term policies.

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