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Is Third-party Two-wheeler Insurance Really Useful?

Team AckoOct 27, 2021

Many bike owners buy a Third-party Liability policy just to meet the compliance requirement. In doing so they get the most basic coverage to avoid related fines without giving much thought to choosing the best-suited bike insurance plan. But the question here is, is buying only the government-mandated third-party coverage really useful? Should you continue availing of only the most basic coverage, and what are the implications of doing so. This article is dedicated to answering such questions and more.

Is Third-party bike insurance really useful?

First, let’s break down Third-party bike insurance for easy understanding.

What is Third-party bike insurance?

In the simplest terms, third-party bike insurance is a policy that protects you from financial loss in case you cause injury to someone or damage their property while riding the insured bike. The person affected by your bike is called a third party. Why third party? Because you (the bike owner) are the first party, your bike insurance company is the second party, and thus anyone else affected is the third party.

In case of an accident, the insurance company will pay compensation for the loss caused to the third party. The compensation amount depends on various factors (severity of injuries, third-party’s age, the extent of loss, ability to earn for calculating death compensation, etc.). The final cost of compensation is decided by the Motor Accident Claim Tribunal (MACT) in case of death or injuries. If a third party has suffered property damage then the compensation can be up to Rs. 1 lakh. 

In short, the third-party bike insurance policy will help you cover the loss you have caused to a third party. Why is this important? Because the cost of compensation can sometimes amount to lakhs of rupees.

What are the benefits of Third-party bike insurance?

Apart from meeting compliance requirements, a third-party policy will cover the following expenses.

If there is a police case or court case that needs to be dealt with, your policy may help you with legal fees along with compensation payments as per the policy terms. You don’t need to bear this as an out-of-pocket expense; your insurer will cover this cost under the Third-party component of the bike insurance policy as per the terms and conditions of the plan.

Death or disability

Death or disability suffered has a grave effect on the lives of family members. Fair compensation must be paid in order to help them regain financial control over their life. This compensation can be high depending upon the life expectancy of the affected person. Your third-party policy will cover such costs.

Medical treatment

Major accidents can lead to high medical expenses. The cost of treatment as required from an accident due to the insured bike will be borne by the insurance company. 

Personal accident insurance

The insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), requires you to buy a Personal Accident Cover with a motor insurance policy (at least one in case you own multiple vehicles). This cover will compensate you (or your family) in case of death or disability.

What are the drawbacks of Third-party bike insurance?

A third-party policy does provide a shield against fines and penalties, but this plan has some major drawbacks. Here is the list.

  • No coverage for own damage

As the name suggests, a Third-party policy offers coverage only against third-party liabilities. You thus need to bear all the expenses related to the damage to your bike. If you wish to get an Own damage cover, you must opt for a Comprehensive Bike Insurance Policy.

  • No customisations

The coverage offered by a third-party policy is determined by IRDAI. This policy cannot be enhanced with additional covers. Thus, you cannot get services like roadside assistance or claim more money with Zero Depreciation cover. 

Do I need an extensive motorcycle insurance policy?

The short answer is yes. If you want to ride a bike legally in India, then Third-party bike insurance is something you should have. India has seen a lot of change in the last few years and new laws have been passed that make Third-party bike insurance necessary. 

To get a better answer, let's try and figure out who needs an extensive, i.e. a Comprehensive bike insurance plan. It's important to remember that irrespective of the demographics, buying at least the basic plan is mandatory. 

Amateur bike riders

If you have less experience in bike riding, then you need a Comprehensive Bike Insurance policy to cover both, third-party and own damage expenses. This will help mitigate your out-of-pocket expenses and ensure maximum coverage.

Even minor damage bothers you

If you're impatient and always on the lookout to repair minor damages, then having an extensive bike insurance plan is a good idea. Being insured means that you can rest easy knowing that your injuries and damage to the bike will be taken care of, as well as fixed costs such as legal fees, compensation payouts, and more as per the policy terms.

You are looking for enhanced coverage

Finally, if you wish to customise your bike insurance policy to suit your needs, then buying an extensive plan is an option. You can customise the plan with add-on coverages available for purchase at the insurance company. Each add-on provides a separate benefit. With some you can get additional services, while some help in increasing the claim amount. Note that add-ons are not available if you buy only the Third-party bike insurance plan.

 If you fall into the above category, you need third-party motorcycle insurance. However, even if you are older and more responsible, it's still a good idea to get insurance. 

What does third-party bike insurance protect me from?

It's a good idea to know exactly what it covers and doesn't cover. Here are some things that your policy will help pay for. 

  • Third-party medical expenses  – If a third party is injured in an accident because of the insured bike, the insurer will help cover the medical expenses. They'll also cover expensive treatments such as emergency surgery. In case of death due to an accident or injury, this policy compensates an amount as decided by the Motor Accident Claim Tribunal.

  • Damage to property – Third-party bike insurance provides coverage for the damaged property if the bike is insured. Property can include vehicles, any structure of a house, crops, etc.

As mentioned earlier, this plan also offers coverage against legal liabilities.

Wrapping up

Third-party bike insurance is beneficial to you regardless of whether or not you like to take risks. Safe riding can help reduce accidents and injuries, but the truth is that accidents are unpredictable and have large financial implications. This basic policy will ensure that fair compensation is paid to the affected party without burning a hole in your pocket. So, yes, buying a Third-party Liability policy is really useful.

Frequently asked questions

Here is a list of questions related to the Third-party Liability Bike insurance policy. Feel free to get in touch with us by sending an email to [email protected] in case you have more queries.

Is a Third-party policy more expensive than a Comprehensive policy?

No, the premium of a Third-party policy is less than the premium of a Comprehensive Bike Insurance policy. This is because the latter offers more coverage than the basic policy. Also, the premium for the Third-party plan is decided by the IRDAI as per bike engine’s cubic capacity. 

Is buying only the mandatory Third-party bike plan sufficient?

No. The Third-party bike insurance planit offers limited coverage as it doesn’t cover damages to your bike. You must bear the repair cost of your bike in case of events like natural calamities, damage from fire, accidents, theft of your bike, etc. if you don't have a Comprehensive bike insurance plan. Thus, buying only the mandatory coverage is not sufficient if you are looking for maximum coverage while reducing out-of-pocket expenses.

How to check if I am covered by a Third-party bike insurance plan?

You must take a look at the existing bike insurance policy to know about the coverages. In case of doubts, contact your bike insurance company and know all the details of the policy you are covered with.

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