Demonetisation: How can you renew your Bike Insurance without thinking about Cash in Hand

On November 8, the Prime Minister of India, Mr. Narendra Modi scrapped Rs 500 and Rs 1,000 currency notes. In India, when people have a reclusive attitude towards two-wheeler insurance, the government’s demonetisation step has given one more excuse to these people. At the time when one has to stand in a queue for hours to withdraw cash from ATMs or a bank branch, and yet walk away with an amount of Rs 2,000, buying or renewing a two-wheeler insurance is unlikely to be on the list of many people.

The move, which was intended to clamp down hoarders of black money and forged currency, has created a massive scarcity of cash and hit the purchasing power of people in India. Data from the Insurance Regulatory and Authority of India (IRDAI) revealed that nearly 75% of vehicles plying on the road are not insured despite it being made compulsory by the law. While many people forget to renew their policies, a large number of people avoid renewing their insurance policies just to save premium.

However, there are various ways through which you can pay your insurance premium without letting the current financial scarcity affect you. If your motorcycle insurance premium due date is approaching, here are some of the ways through which you can pay your premium. Have a look:

1. Online renewal: According to the FICCI-KPMG Indian Media and Entertainment Industry Report 2015, the number of internet users in India will increase by 50 million annually till 2020. The majority of motor insurance companies have created a simple interface on their official websites so that people can go there and renew their bike insurance online. All you have to do is log on to the insurer’s website and fill the required information, including policy details, vehicle registration number, add-on cover, if any, and pay your premium through net banking. The insurer will review your policy and send the policy document via email, and you will not have to undergo the hassle of getting the vehicle inspected.

Nowadays, many insurance companies have allowed the policy renewal through mobile apps also. It means you can easily renew your two-wheeler insurance policy with the help of the self-inspection feature of the mobile application of the insurance company. In this case, the insurer’s surveyor will not come to inspect your vehicle. Some of the other online payment modes are:

• IMPS: The Immediate Payment Service (IMPS) helps you access your bank account and transfer funds securely even on Sundays and bank holidays or during the wee hours. As the amount is instantly credited into the beneficiary account, you can use it to pay your premiums.

• NEFT: You can make premium payments through your bank accounts by using National Electronic Fund Transfer (NEFT) service. Just log on to your bank account, choose the NEFT transfer option and enter the amount to be transferred.

• Credit/Debit Cards: Your credit or debit card can also help in renewing your bike insurance. Over the past few years, the use of plastic money has increased in India. According to the Reserve Bank of India, there was a 16.3% and 21.3% increase in the use of debit and credit cards respectively, in FY15 from a year earlier.

1. Electronic Clearing Service (ECS): It is an automated, simple, and convenient way of paying an insurance premium in which you direct your bank to pay your premium on a specified date.

2. Postal money order: A money order is issued by the Post Office in favour of the ‘payee’ in whose name money is sent.

3. Cheque/demand draft: You can issue a cheque or create a demand draft in favour of the insurance company.

4. UPI: The Unified Payment Interface (UPI) allows all bank account holders to send and receive money with the help of their smartphones without entering their bank account or net banking details. You can pay your premium by giving the virtual payment address of the beneficiary. Moreover, this service is available 24×7 and can be used to make payments even on public/bank holidays.

5. Mobile Wallets: It is a digital or electronic form of the physical wallet that you can use to make payments, transfer money and perform various other cash activities. It is a secure and easy way of paying your insurance premium without having to carry multiple credit or debit cards or lots of coins and currency.

As currency disappears, more and more people are turning to mobile wallets. Recently, the Reserve Bank of India (RBI) has also increased the monthly mobile wallet limit for users from Rs 10,000 to Rs 20,000 and Rs 50,000 for merchants. With serpentine queues outside ATMs continuing to haunt public, many mobile wallets are unveiling exciting offers to woo customers. According to the ASSOCHAM-RNCOS joint study, the mobile wallet transaction volume is likely to reach Rs 153 billion by FY22 as compared to Rs 3 billion transactions in FY 16.

The current situation has made us think about long-term two-wheeler insurance policies. Insurers have launched long-term two-wheeler insurance policies so that policyholders do not need to go through the hassle of renewing their policy every year. In the absence of the policy, the policyholder is exposed to various kinds of risks. For instance, if you meet with an accident when your policy lapses, you are liable to pay the entire loss.

However, a long-term policy keeps your vehicle insured continuously for three years. If you have a long-term bike insurance, you can save yourself from the trouble of renewing the insurance during demonetisation. Also, if you already have a yearly two-wheeler insurance policy, you can convert it into a long-term policy. The insurer will issue a new policy, and transfer NCB (if earned on a previous mail) to the new policy.

A quick look at the benefits offered by long-term motorcycle insurance policies:

• Avoid non-renewal policy related risks: By not renewing the policy, the insurer is exposing itself to various types of risks and damages. For instance, if your two-wheeler meets with an accident or is stolen, you would have to bear all the financial losses. However, you can easily avoid it if you have a long-term two-wheeler policy.

• Avoid vehicle inspection: Some insurance companies insist on inspecting the vehicle to know its condition in case of a lapsed policy. When you purchase a long-term insurance, you can easily avoid such a situation because the insurance policy is renewed for two to three years in one go and thus, you don’t need to go for a vehicle inspection every year.

• Get discounts on own damage insurance premium: Many insurers offer a discount to policyholders on their own damage insurance premium part. As long-term policies cut administrative and policy-issuing costs, these savings are passed on to customers in the form of a lower premium cost.

• Save yourself from the annual premium hike: Long-term insurance policies save an individual from the annual hike in third-party premium rates. Third-party insurance premiums are fixed by IRDAI, the apex insurance body, which increases the tariff rates by 10-15% per annum. Many times, insurance companies also increase their premium rates on the basis of factors like their claim experience, policy coverage, etc. But you can insulate yourself if you have a long-term insurance policy.