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Hypothecation in bike insurance

Published On Dec 23, 2022

Hypothecation in bike insurance

Remember those days when buying a vehicle was a status symbol? But now, everyone can fulfill their dream of owning a bike without worrying about the financial burden. In India, there are innumerable banks and financial institutions that provide loans at different interest rates to buy cars. You can get the car loan for a fixed duration and repay the loan amount in installments. Different banks and financial institutions follow different processes to grant a loan. However, one thing that is common among everyone is “hypothecation." Wondering what this means? Continue reading to find out more! 

Hypothecation in bike insurance

What Is the Meaning of Hypothecation in Bike Insurance? 

Whether you purchase a car or bike on loan, the vehicle will be registered under your name at the local Regional Transport Office (RTO). Despite being financed by banks and financial institutions, the registration certificate of the vehicle will be issued in your name. However, the RTO will record that your car has been hypothecated in favor of the relevant bank. The hypothecation bike insurance process will be similar to the loan process. This means it will be issued in favour of the bank from which you have taken the loan. In simple terms, the car’s ownership will be held by the bank until you repay the total loan amount. 

How Can I Add Hypothecation to My Bike Insurance Policy? 

The insurance company will cover the hypothecation details in the policy document regardless of whether you are purchasing a second-hand or new car on a bank loan. Besides this, during the time of renewals if you are not satisfied with the present insurance provider and switch to another, a new insurer will also question you about the ownership of the vehicle. As a result, you may also have to submit a copy of the RC of your vehicle to the insurance company to share the hypothecation details with the company.

What Documents Are Required for Vehicle Hypothecation? 

The Regional Transport Office (RTO) will add the hypothecation details to the registration certificate in case you buy the vehicle through a bank loan. Listed below are the documents that you would need to submit at the time of registration for the hypothetical vehicle. 

  • Registration certificate
  • Duly filled Form 34, hypothecation application form
  • Motor insurance policy
  • Address Proof of the vehicle owner
  • Pollution Under Control Certificate (PUCC) 
  • Invoice of the fee payment endorsing the hypothecation 
  • Self attested copy of PAN card

What Is the Procedure for Removing Hypothecation From a Bike Insurance Policy? 

Once you repay the total amount of the bank loan, you can remove the hypothecation mark from your bike insurance policy. The respective bank and Regional Transport Office will intervene during the process. As soon as you receive the NOC from the bank, you can share it with your insurance company to remove hypothecation from a bike insurance policy. Here’s a quick guide that will help you know the procedure for removing it. 

  • Cancel Vehicle Hypothecation:

You can remove hypothecation only after the payment of your car loan is fully completed. After doing so, ensure that your bank statements show no balance against the loan that you have taken. You can either repay the loan before the due date or regularly throughout the loan period. The bank will issue a No Objection Certificate (NOC) once the loan has been repaid completely. 

  • Collect Documents: 

To remove the hypothecation from your vehicle certificates, you will need to collect the following documents from the bank that will be further submitted to the RTO: 

1. No Objection Certificate (NOC) to confirm that the loan amount is completely paid by the vehicle owner. 

2. Form 35 application form 

3. Bike insurance policy documents 

  • Submit Application For Hyothecation Removal:

You must visit the Regional Transport Office (RTO) to submit all the above documents and remove the hypothecation. After submitting all the documents, complete the RTO fee payment to initiate the removal procedure. 

  • Pay Hypothecation Cancellation Fee: 

In order to begin the cancellation process, you will first need to pay the RTO fee. The fee may differ from one Indian state to another. You can check the fee for your respective state on the web portal of the transportation department. Once all the documents are paid and the fee payment is completed, the RTO will cancel the hypothecation for your vehicle. 

How Can You Check the Hypothecation Cancellation Status? 

The process of canceling hypothecation may vary from one state to another. Therefore, you must visit the nearby Regional Transport Office (RTO) to know the status of your application. However, in most of the cities, you can know the status online through the Parivahan web portal. 


To sum up, hypothecation in bike insurance is when you pledge a bike to take against a loan from a bank or any other financial institution. Once the loan amount is fully repaid, it is mandatory to cancel the hypothecation.

Also read: Steps to claim bike insurance twice a year


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
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