Motor Insurance

Differentiating Bike Warranty & Bike Insurance

by SMCIB on Sunday, 11 June 2023

Differentiating Bike Warranty & Bike Insurance

When it comes to safeguarding your bike, there are two important terms that come to mind - bike warranty and bike insurance. Both these concepts offer unique benefits and coverage.

With a warranty, you are guaranteed a safety net against unexpected malfunctions and manufacturing defects. It is designed to cover only the mechanical and electrical components, leaving you vulnerable to risks beyond such scope.

On the other hand, bike insurance promises a more comprehensive level of protection, that not only includes damages to the physical components of your bike, but also guards against potential risks such as damages, theft, accidents, and unexpected incidents.

In this article, we discuss and understand the differences between bike warranty and bike insurance to provide you with the power to make informed decisions.

 

Bike Warranty

A bike warranty is a form of assurance given by the manufacturer that offers protection against any potential defects or faults in the bike's manufacturing. Such a guarantee typically includes the cost of repairing or replacing any parts that may be found to be faulty during a specific timeframe, often lasting between 2-3 years from the date of purchase.

It is important to note that a bike warranty only covers defects resulting from the manufacturing process, and does not provide coverage for any damages caused by accidents or negligence. Furthermore, the warranty is provided directly by the manufacturer and is not by the insurer. Usually, the cost of the warranty is included in the overall price of the bike at the time of purchase.

For example,

Let's say that Freddy purchases a new bike for commuting to work. The bike comes with a 2-year warranty from the manufacturer. One year after purchase, Freddy experiences issues with the bike's brakes and brings it to the manufacturer for repair. Since the brake issue comes under manufacturing defect, the manufacturer will cover the cost of the repair under the warranty.

 

What is Covered Under Bike Warranty?

Here are the components covered under a bike warranty –

1️⃣ Mechanical Parts
Mechanical parts refer to vital components like the engine, gearbox, suspension system, and other related elements.

2️⃣ Electrical Parts
Electrical parts encompass various components responsible for the bike's electrical systems, including the ignition coil, CDI (Capacitor Discharge Ignition) unit, starter motor, wiring harness, etc.

3️⃣ Safety Equipment
Safety equipment comprises features that enhance the rider's safety and control while on the bike including Anti-lock Braking System (ABS), ride-by-wire technology, traction control systems, etc.

 

What Is Not Covered Under a Bike Warranty?

Here are some things that are not covered under a bike warranty –

?Consumables
Items such as washers, rubber components, plastic parts, etc. that are subject to regular wear and need periodic replacement.

?Regular Wear and Tear
Typically, normal wear and tear resulting from regular use are not covered by warranties - including tires, brake pads, chains, etc. that deteriorate over time.

?Negligent Riding
Any damages resulting from negligent riding or improper maintenance are generally not covered.

?Illegal Racing
Any damages that occur during illegal racing or other unauthorized activities are typically excluded from coverage.

?Alterations/Modifications
The warranty may become void if unauthorized alterations or modifications have been made to the bike.

?Labour Costs
The associated labor costs for repairs or replacements will not be covered.

 

Bike Insurance

Bike insurance provides financial protection by offering comprehensive coverage against a range of risks, including damages to your bike and third-party liabilities.

  • In the event of accidents, theft, fire, natural disasters, or other unforeseen incidents, bike insurance covers the expenses for repairing or replacing your bike.
  • In addition to protecting your own bike, insurance policies also cover liabilities towards third parties. This includes injuries or damages caused to third-party individuals or their property due to your bike.

Insurance companies offer bike insurance, which can also be purchased separately for your bike. Several factors such as the bike's make and model, age, usage patterns, geographical location, etc., are taken into account when evaluating the risk associated and the cost of insuring your bike.

For example,

Fathima recently purchased a new bike along with a comprehensive bike insurance policy. A few months later, her bike gets stolen from a parking lot. Fathima is relieved as the insurance policy covers the cost of replacing her stolen bike. 

Let us now understand how bike insurance and bike warranty differ from each other in various aspects-

Coverage

Bike Insurance

Bike Warranty

Third-party liabilities

Covers third-party property damage, injuries, and death.

No coverage.

Damages to the insured bike

Covers accidental damages to insured bikes.

No coverage.

Replacing faulty parts of the bike

No coverage.

Covers faulty parts and provides replacements.

Customization

You can customize your base policy by opting for various add-ons.

No customization is allowed or available.

Is it compulsory?

Own-damage insurance is optional, but it is mandatory to have a Third-party coverage

Warranty is included at the time of purchase. Extended warranties are optional.

Personal Accident (PA) cover

Must be purchased separately

No coverage

Bike Theft

Covers bike theft

No coverage

Total loss (damages that are beyond repair)

Covers total loss

No coverage

Usual wear and tear

No coverage

No coverage

Mechanical or electrical failure

No coverage

Covers mechanical/electrical failure within the warranty period

Manmade/natural disasters (floods, riots, etc.)

Covers artificial or natural disasters

No coverage

Fire or explosion

Coverage offered

No coverage

 

Bike Warranty Or Bike Insurance: Which is Better?

When considering the choice between a bike warranty and bike insurance, it is important to understand their purposes. While both options offer financial security against unexpected bike losses or damages, they provide different levels of protection.

A bike warranty primarily covers faulty parts, ensuring that repairs or replacements are covered by the manufacturer. On the other hand, bike insurance provides coverage for accidental damages or losses, including theft, accidents, natural disasters, and more.

For example, say Sara buys a new bike. Now, let’s look at two case scenarios -

Scenario 1: Sara’s Bike Covered by Bike Warranty

She gets bike warranty along with her vehicle that provides coverage for any faulty parts or defects for a period of 2 years. One day, while riding her bike, she experiences a malfunction in the accelerator cable. In this case, Sarah's bike warranty will come into effect, allowing her to get the accelerator cable replaced or repaired without incurring any additional costs.

Scenario 2: Sara’s Bike Covered by Bike Insurance:

She purchases comprehensive bike insurance separately. Unfortunately, while riding her bike, she accidentally collides with another vehicle, resulting in significant damage to her bike and causing injuries to the other party involved. In this situation, the bike warranty won't cover the damages caused by the accident. However, Sarah's bike insurance will provide the necessary coverage, taking care of the repair costs for her bike and the liabilities towards the injured party.

 

So, rather than comparing them as competing options, bike warranty and bike insurance can work together to provide comprehensive protection. Having both ensures you are covered for manufacturing defects as well as unforeseen incidents, accidents, and potential liabilities.

 

To conclude,

Understanding the difference between bike warranty and bike insurance is crucial for every bike owner. While a bike warranty focuses on protection against faulty parts, bike insurance provides comprehensive coverage for unforeseen accidents, damages, theft, and third-party liabilities. To ensure comprehensive protection for your bike against a range of risks and uncertainties, it is crucial to have both a bike warranty and bike insurance. Each serves a distinct purpose, and together they provide holistic coverage against any unforeseen events.

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