Two Wheeler Insurance First-Party vs Third-Party
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As a bike owner, protecting your vehicle against financial risks is essential. While buying insurance, many riders struggle to understand the two-wheeler insurance first party vs third party difference. Understanding the difference between first party and third-party insurance for bike helps you choose the right coverage based on your needs, budget, and risk exposure. This page explains everything about 1st party vs 3rd party bike insurance, including coverage, cost, claim process, and which one is better for you.
How Many Parties Are Involved in Two-wheeler Insurance?
While buying two-wheeler insurance, it is not enough for you to understand the premium to be paid or the coverage, but you should also be aware of terms like the first party, second party, and third party in your two-wheeler insurance policy.
As a first-time buyer, you might wonder about these terms used in your policy documents, but having a profound knowledge of these terms will help you at the time of buying/renewing the policy and raising a claim for the damages.
- First Party: The first party in the two-wheelers refers to the bike owner, whose name is registered in the policy. The first party has to pay the insurance premium to their insurer, and they can raise the claim under the insurance policy.
- Second Party: The second party refers to the insurer or the insurance company that protects your bike and compensates for the damages to your bike.
- Third Party: A third party is the vehicle owner who has been affected by the instances of the first party's insured bike in any form.
For instance- if the insured first-party bike owner has caused any damage or injury to the third-party's vehicle or its owner, then the third party enjoys the insurance benefits given by the second party or the insurer.
Difference Between First-Party and Third-Party Insurance for Bike
Below is a detailed comparison of two-wheeler insurance first party vs third party:
|
Point of Basis |
First-party Two-wheeler Insurance |
Third-party Two-wheeler Insurance |
|
Definition |
First-party insurance is purchased by the policyholder to cover the Own-damages (OD). |
Third-party insurance is a mandatory cover and it covers the damages to the third-party life or property. |
|
Coverage |
It covers the damages to the insured bike due to any accident, natural or man-made disaster, theft, fire explosions, and total loss. |
It only covers the damages or loss to the third party including the damages to their vehicle or in case of any injury or even fatal casualty to the third party. |
|
Exclusions |
There are certain conditions that are not included under First-party bike insurance including regular wear & tear, mechanical or electrical breakdowns, riding under the influence of alcohol, and damages caused while riding a bike without valid documents like- DL, PUC, & insurance documents. |
One major exclusion under your Third-party bike insurance is damage incurred to your own bike. |
|
Premium Calculation |
The premium for First-party two-wheeler insurance is calculated on the basis of the approximate bike’s market value, location, and make & model of the bike. |
Premium for Third-party two-wheeler insurance is calculated on the standard rates that are set by the IRDAI. |
|
Claim Process |
The policyholder can raise claims directly from their insurer. The process of raising claim against First-party is smooth. |
The process for raising claims under Third-party is comparatively complex than First-party bike insurance. The claims are raised only by the third party for their own damages. |
|
Add-on Covers |
The policyholder can easily buy any add-on cover with their First-party two-wheeler insurance policy and can enhance its coverage. |
There is no such option to buy add-on covers to extend the coverage in their basic Third-party two-wheeler insurance policy. |
|
Claim Settlement Process |
The claims are settled by the insurance company. |
In Third-party bike insurance, the claims are settled by Motor Accident Claims Tribunal Court (MACTC). |
|
Mandatory |
First-party two-wheeler insurance is not mandated in India. |
According to Motor Vehicle Act 1988, if you are a bike owner, it is compulsory to have at least third-party two wheeler insurance. |
Significance of First-party Two-wheeler Insurance
First-party two-wheeler insurance or comprehensive bike insurance policy protects the interest of the bike's owner. Under the first-party two-wheeler insurance, damages to your bike due to any natural or man-made disaster, accident, total loss, theft, or explosion are covered. Under this, third-party claims are also covered. Hence, if any third party gets affected by the insured first party's vehicle Then the second party (insurer) will settle the claim for them.
Significance of Third-party Two-wheeler Insurance
As per the Motor Vehicle Act 1988, a bike owner must have at least third-party two-wheeler insurance. Third-party insurance only covers the damages incurred to the third party's life or property. Its insurance price is less than first-party insurance cover because of the lower extent of coverage.
Why Third-Party Insurance is Mandatory?
As per law, every bike owner must have at least third-party bike insurance to legally ride on Indian roads. The objective of making this policy compulsory is to ensure that:
- Victims of road accidents receive compensation.
- Financial liability does not fall entirely on the bike owner.
However, legal compliance alone may not provide sufficient financial protection.
Which One is Beneficial?
The primary difference between first-party and third-party two-wheeler insurance is the extent of coverage. As you must have now understood, third-party insurance covers third-party liabilities only. On the other hand, first-party insurance cover gives you extensive coverage, by protecting you against Own-damages (OD) and third-party liabilities. Given the choices, it is necessary to buy two wheeler insurance online that fulfills all your needs and is within your budget.
If you are looking to buy a basic coverage plan with affordable premiums, third-party two-wheeler insurance should be your first choice. However, if you seek all-around protection for your bike, then you should purchase first-party two-wheeler insurance. As stated earlier, first-party two-wheeler insurance is a comprehensive cover that financially protects you against various types of damages at once.
Common Mistakes Riders Make While Buying Bike Insurance Policy
- Choosing only third-party bike insurance to save premium.
- Ignoring add-ons in comprehensive bike insurance plans.
- Not reviewing IDV at renewal.
- Confusing own damage cover with third-party liability.
Understanding the difference between first party and third-party insurance for bike helps avoid these mistakes.
FAQs – First Party Vs Third Party Bike Insurance
-
Which insurance is better, third party or first party?
Ans. First-party (comprehensive) insurance is better as it covers both your own bike damage and third-party liabilities, while third-party insurance only covers damages caused to others. -
Is first party insurance enough for a bike?
Ans. Yes. First-party (comprehensive) insurance includes both own damage and third-party liability, making it sufficient and more protective. -
What are the disadvantages of 3rd party insurance?
Ans. It does not cover damage to your own bike, theft, natural disasters, or personal accident expenses. Coverage is limited to third-party liabilities only. -
Can I drive with 3rd party insurance?
Ans. Yes. Third-party bike insurance is legally mandatory and allows you to ride your bike legally on Indian roads. -
Can I drive my bike with third party insurance?
Ans. Yes, you can legally drive with third-party two-wheeler insurance, but your own bike damages will not be covered. -
Can I buy only 1st party insurance?
Ans. No. You cannot buy only own-damage (1st party) insurance without having an active third-party policy. Third-party cover is mandatory by law.
