Mandatory bike insurance in India: Is it time to shift toward usage-based pricing?

Bike Insurance in India is not optional; it is mandatory. But here is the question: why should someone who rides just a few kilometres on weekends pay the same premium as a daily commuter covering 40 kilometres each day?

That gap between usage and cost has triggered conversations around a new model. Usage-based bike insurance is already gaining ground in other countries. The idea is simple: pay only for how much you actually ride. This blog explores why this shift is being discussed, how global markets are experimenting with it, and what it could mean for Indian riders.

Why is bike insurance compulsory in India

The purpose of mandatory insurance is to protect riders and third parties in the event of an accident. The Insurance Regulatory and Development Authority of India (IRDAI) requires every two-wheeler to have a policy before hitting the road.

The system is designed for safety and financial security. But the way premiums are charged has not kept pace with how riders actually use their bikes.

How two-wheeler policy pricing works today

Right now, two-wheeler policy pricing follows a fixed model. Premiums are based on the type of vehicle, engine capacity, and age of the bike. Whether you ride 50 kilometres a week or 500 does not make much difference.

This model suits people who ride daily. But it feels unfair to those who ride occasionally. Retired owners, people working from home, or families with multiple vehicles all fall into this low-usage category. Their bikes may be parked most of the time, yet they pay as much as heavy users.

What is usage-based bike insurance?

Usage-based bike insurance is exactly what it sounds like. Your premium depends on how often and how far you ride. Some models use mobile apps or telematics devices to track mileage. Others allow riders to buy coverage in blocks, similar to prepaid mobile data.

In simple terms, it is also referred to as pay-as-you-ride India. If your bike is parked most of the month, your costs stay low. If you ride more, you pay more. The goal is to create fairness and link insurance cost directly with usage.

Why low-usage riders are asking for change

Not all riders use their bikes the same way. Consider these groups:

• Weekend riders who take their bikes out only for leisure trips
• Elderly owners who keep a bike for emergencies but rarely use it
• Multi-vehicle households where a two-wheeler is the secondary mode of transport
• Remote workers who barely commute

For example, an IT professional in Pune who works from home may only ride twice a week for errands. Under the current model, he pays the same as a colleague commuting 50 kilometres daily. For such riders, a pay-as-you-ride India approach feels not only fair but necessary.

Benefits and challenges of a pay-as-you-ride model

Benefits

• Fair pricing: Riders pay in proportion to actual usage, which builds trust
• Transparency: Telematics or app-based tracking makes costs clearer and easier to understand
• Safer habits: International data shows usage-based models encourage cautious driving
• Higher insurance penetration: More riders may be willing to buy comprehensive cover if they know they are not overpaying

Challenges

• Technology readiness: India would need reliable digital tracking at scale, either through apps or devices
• Privacy concerns: Some riders may be uncomfortable sharing riding data with insurers
• Regulatory hurdles: IRDAI would need to create clear rules on how data is collected, stored, and used
• Awareness gap: Many riders may initially find the model confusing compared to fixed premiums

Is India ready for the shift?

India has the right conditions for a gradual rollout. Smartphone adoption is high. Riders are already used to app-based services, from navigation to payments. Insurers are also experimenting with digital-first products.

Still, the shift will not happen overnight. Pilot programs are necessary to test adoption. Regulators will have to set standards for telematics and privacy. Partnerships with telecom providers could also be needed to ensure accurate data capture.

The real driver will be trust. Riders must believe that usage-based pricing saves them money without adding unnecessary complexity. Insurers must balance innovation with accessibility to avoid alienating customers who prefer simple, fixed-premium policies.

Conclusion

At Zuno, we see how conversations around usage-based bike insurance are growing in India. Riders are asking for policies that are flexible and fair, especially those who do not use their bikes every day. Globally, pay as you ride India style models are proving effective, offering both savings and peace of mind.

We believe India has the right ingredients to move in this direction over time. High smartphone penetration, openness to digital services, and the demand for fairer costs all point toward gradual adoption. Still, it will take careful steps, strong regulation, and consistent education to make it mainstream.

As a digital-first insurer, Zuno is committed to keeping insurance simple and relevant. The future of two-wheeler policy pricing may not be fixed forever. Riders deserve models that reflect how they actually use their bikes, and insurers have an opportunity to create products that deliver that fairness.

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ARN: Zuno/Blog/DM/Mandatory bike insurance in India: Is it time to shift toward usage-based pricing?/09/25/72