Whenever you buy something either online or offline, you will have to pay a little extra than what the MRP of the product is. This is due to a list of taxes that are charged by the government. As a result, the actual price you pay for your purchase can be a lot higher than you intended it to be.
However, this changed a few years ago. 2017 was the year that India saw one of its biggest tax reforms. Other than being huge, it was also a historic one. This taxing structure update was termed the Good and Services Act of 2017. Abbreviated as GST, the Goods and Services taxreplaces all the other taxes that you would have to pay. So, instead of multiple taxes, now you just have to pay one that will be determined from the base price of the product or service. Since this tax applies to any product or service, it affects the bike insurance industry as well.
Impact of GST on bike insurance
According to the details of GST, various products and services are segregated into different categories. These categories depend on whether the products are living essentials or luxury commodities. Based on this classification, different products and services are classified into varying tax slabs.
According to this classification., bike insurance comes into the 18% tax slab. In the earlier tax structure, bike insurance buyers had to pay 15% of the total price as tax. Hence, GST causes a 3% hike in the additional money that you have to pay for purchasing a bike insurance policy. While a 3% hike does not create a huge gap, it still means that customers would have to pay more to buy coverage for their bikes.
As you may know that two-wheeler insurance plans are offered in two types. These two types are third-party insurance and comprehensive insurance. A third-party insurance policy is the most basic level of coverage you can have. Hence, it is also the mandatory amount of protection that you need for riding your bike on the streets. On the other hand, a comprehensive bike insurance planis the complete solution for your bike insurance needs. It offers the benefits of a third-party policy along with a greater coverage scope. For this reason, it is always recommended to buy a comprehensive policy. But the price of a comprehensive policy is higher. This means that you would have to pay more money as GST.
What this means for the bike insurance industry
The key feature that separates third-party policies and comprehensive plans is the fact that the latter covers damages to your vehicle. As you are paying for the policy regularly, the insurance plan should ideally benefit you more than anyone else. For this reason, most insurance experts always recommend buyers go for a comprehensive policy.
However, the 3% increase in expense towards buying a bike insurance policy makes things difficult. Due to this increase in expense, many customers are inclining towards buying the basic third-party protection. This hurts both the customer and the industry as well. The customer does not have access to the best protection they can have. The bike insurance industry grows at a much slower pace because there is a limited amount of money that comes through purchases.
How does this affect you?
Regardless of the cost you would have to bear for bike insurance, the truth of the matter is that it is important to buy the best bike insurance available. You never know what unfortunate incident may happen on the road. Hence, it is better to be prepared for a whole range of situations. Hence, it is better to buy a comprehensive policy. Not everybody hasenough money to deal with all the expenses that arise from accidents. A comprehensive policy offers financial support and peace of mind in a stressful situation. For all these benefits, it is extremely worththe 3%hike in expenses. Moreover, as a result of this price hike, insurance providers are likely to introduce new benefits, discounts, special offers, etc. You can take advantage of this situation and get better coverage.