Long-Term Two-Wheeler Insurance: How IDV Works Over 5 Years

Key takeaways

Every new two-wheeler must have five years of third-party cover from the date of purchase.
Own-damage cover can be one year (renewed annually) or multi-year, depending on what you bought.
On multi-year own-damage cover, IDV is set for each year in advance and steps down with age.
When you sell, the policy can be transferred or cancelled for a pro-rata refund, subject to the insurer’s terms.

Since September 2018, new two-wheelers in India must be sold with long-term third-party insurance covering five years. That rule changed how bike insurance is bought — and created some confusion about IDV.

The two common structures

Structure	Third-party	Own-damage	IDV
Bundled (“1+5”)	5 years, paid upfront	1 year; renewed each year as standalone OD with any insurer	Recalculated at each OD renewal
Long-term package (“5+5”)	5 years	Multi-year, paid upfront	Set in the schedule for each year in advance

Insurers decide which multi-year own-damage options they offer. The bundled structure is the most common because it lets you shop around for own-damage cover each year.

How IDV steps down on a multi-year policy

Policy wordings fix the IDV at the start of the insurance and then change it according to the depreciation slab for each one-year block of the policy period. For a bike bought and insured on the same day with an ex-showroom price of ₹1,00,000:

Policy year	Age at start of year	Depreciation	IDV for that year
Year 1	0 months	5%	₹95,000
Year 2	12 months	15%	₹85,000
Year 3	24 months	20%	₹80,000
Year 4	36 months	30%	₹70,000
Year 5	48 months	40%	₹60,000

Check your policy schedule: it should list the IDV for each year. If a theft or total loss happens in year 3, the claim is based on the year-3 IDV.

NCB on long-term cover

On a bundled policy, NCB works normally: each claim-free year earns the next slab when you renew the one-year own-damage cover. On a multi-year own-damage policy, how and when NCB is credited depends on the insurer’s product — some apply it at the end of the term or at the next renewal. Ask before you buy.

Selling the bike mid-term

Transfer: the buyer applies to the insurer to transfer the policy within 14 days of the ownership transfer. Any NCB discount you enjoyed is typically recovered from the buyer.
Cancel: if the buyer takes a new policy, you can usually cancel yours and get a pro-rata refund of the unused period, subject to the insurer’s cancellation terms and no claims having been made.
NCB: ask for an NCB certificate so you can use your bonus on your next two-wheeler.

Is long-term own-damage worth it?

Advantages: one payment, no risk of a lapse, price locked for the term. Disadvantages: less flexibility to switch insurer or change add-ons, a larger upfront payment and sometimes delayed NCB benefit. For most owners, the bundled structure with yearly own-damage renewal is the more flexible choice.

See your bike’s IDV for each of the next five years.

Bike IDV Calculator

FAQs

My bike is 2 years old. Do I still need the 5-year TP?

The five-year TP bought at purchase should still be running. You only need to renew own-damage cover each year until the TP period ends.

Can I change insurer for own-damage while TP is with another insurer?

Yes. Standalone own-damage cover can be bought from any insurer as long as a valid third-party policy is in force.

What happens after five years?

You renew third-party and own-damage cover together (usually as a one-year comprehensive policy), and IDV is agreed based on market value.

Sources

IRDAI directions on long-term third-party cover for new two-wheelers (effective 1 September 2018) and standalone own-damage cover, irdai.gov.in.
Long-term two-wheeler policy wordings — IDV fixed for each one-year block per the depreciation schedule.