Team AckoOct 27, 2022
Buying bike insurance requires adequate research, planning, and understanding of various terms associated with it so that you decide on the right plan for your vehicle. But, before you decide the right type of bike insurance for your vehicle, you must understand some essential terms related to it.
Some of the important bike insurance terms that you must be aware of are 1st, 2nd, and 3rd party in vehicle insurance. You should have more clarity on these terms as they will help you know more about the insurance plan for your bike. Read on to learn about first, second, and third-party in bike insurance and how they relate to the insurance policy.
The term ‘first party’ in bike insurance refers to the person who buys the insurance. The first party pays the insurance premium to be eligible for benefits and other compensation under the bike insurance policy.
However, the term ‘first-party bike insurance’ refers to the insurance that provides complete coverage against the damages incurred by your bike. The first-party bike insurance includes coverage against natural calamities, fire, man-made calamities, theft, accidental damages, and total loss.
In this type of bike insurance, there are two parties involved. That’s you and the insurer. When you raise a claim, the insurer pays the compensation as per the terms and conditions of the policy.
For example, when you purchase a two-wheeler insurance policy for protection against accidental damage to your bike, you are the first party. The type of bike insurance is referred to as first-party insurance. It is also referred to as the ‘Own Damage’ cover.
The term ‘second party’ in bike insurance refers to the party offering the insurance coverage. In this case, it is the insurance company (such as ACKO). While the first party is responsible for paying the insurance premium, the insurer, also called the second party, is liable to compensate for the claim against the insurance policy.
However, there is no concept such as ‘second-party bike insurance.’ It simply refers to the insurance company as the second party.
The term ‘third party’ in bike insurance refers to someone other than the first or second party. They can be anyone who can raise a claim against your insured bike for damages or losses caused to their property or due to injuries or death.
However, the term ‘third party bike insurance’ refers to the insurance that provides coverage against third-party liabilities.
There are three parties involved in this type of bike insurance: first, second, and third. If the third-party raises a claim against the insured towards his/her losses, he/she will receive the insurance benefits from your insurer. This type of insurance policy is also known as a Third-party Liability policy or TP policy.
For example, if your bike damages a third-party’s vehicle, then the Third-party bike insurance will compensate them as per the terms and conditions of the policy. The insurance is designed to cover you against legal liabilities in case of an accident or damage to the property of a third party.
Now that you have more clarity on first-party and third-party two-wheeler insurance, you must also understand the difference between 1st party bike insurance and 3rd party bike insurance so that you can choose the ideal insurance plan for your bike.
|Factors||First-party bike insurance||Third-party bike insurance|
|Coverage||Covers only damage to the insured bike caused due to an accident, natural or man-made calamities, theft, total loss, fire.||Covers only third-party liabilities, including damages to their property or in case of injury or death of the third party.|
|Premium||Rates are based on the approximate market value of the bike (Insured Declared Value), location, model, etc. Own Damage cover is cheaper than Third-party Bike Insurance.||Standard rates are set by the IRDAI (based on bike engine cc) and comparatively higher to Own Damage cover or first-party insurance|
|Nature of claims||The insured can raise claims directly with the insurer and is entitled to the policy’s benefits as per the terms and conditions.||The claim is raised only by a third-party person—claims related to damages to their property or in case of injury/death of the third party.|
|Exclusions||1. Normal wear and tear. 2. Mechanical or electrical issues. 3. Riding under the influence of an intoxicating substance. 4. Damages caused when riding without valid documents (Driving Licence, Insurance Certificate, etc.).||1. Damage incurred by your bike. 2. Riding the bike without a valid Driving Licence. 3. Riding under the influence of an intoxicating substance.|
|Option to enhance the coverage||You can opt for add-on covers that enhance the base plan’s coverage. You can choose add-ons such as Zero Depreciation cover, No Claim Bonus (NCB) Protection cover, Roadside Assistance cover, Return to Invoice cover, etc.||There is no option to include add-on covers to extend the coverage. The coverage is limited to third-party liabilities and has no scope to enhance the plan.|
|Claim settlement||By the insurer||By the Motor Accident Claims Tribunal court|
Third-party bike insurance offers basic coverage and is mandatory as per law to legally ride the bike on Indian roads. The plan covers you against third-party liabilities such as damages to someone’s property or injuries to them while riding your bike.
Comprehensive two-wheeler insurance offers exhaustive coverage. Apart from third-party liabilities, the insurance plan also provides financial protection against damages to your bike caused due to an accident, fire, man-made/natural disasters, theft, and total loss. Also, this type of insurance plan offers the scope of including valuable add-ons that extend the base policy’s coverage.
Both first-party bike insurance and third-party bike insurance are essential if you own a bike in India. While you have to insure your bike with the Third-party Liability plan since it is mandatory, the Comprehensive plan offers broader coverage by providing third-party and own damage coverage.
Here are some commonly asked questions about first-party and third-party bike insurance.
No. It is mandatory to insure your bike with third-party two-wheeler insurance as per The Motor Vehicles Act, 1988. Failure to insure your bike with third-party bike insurance leads to penalties and sometimes even imprisonment.
Along with coverage for third-party liabilities, it also covers damages or losses incurred by the insured bike. You can also include valuable add-ons that extend the scope of the coverage.
Yes, you can switch to a Comprehensive insurance plan from a Third-party insurance plan when you renew your policy.
First-party two-wheeler insurance is also referred to as Own Damage cover. Its main feature is to provide coverage against damages or losses to your bike.
The Insured Declared Value (IDV) is the approximate market value of your bike. You can select the IDV only when you purchase the Comprehensive insurance plan and not while buying the Third-party bike insurance policy.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions. Explore More:
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