Two Wheeler Insurance First Party vs Third Party

As a bike owner, the best thing you can do to protect your bike from severe damages is by purchasing two-wheeler insurance. A bike is no less than a companion of yours whether you go to your office on it or on a long road trip, it is advised to insure it under a two-wheeler insurance policy. But before buying two-wheeler insurance, you must understand the difference between the two types of plans i.e. first-party and third-party two-wheeler insurance. Below we have done a comparative study between these two.

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How Many Parties Are Involved in Two-wheeler Insurance? 

While buying insurance for your two-wheeler, 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. 

1. 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.
2. 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.
3. 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.

Comparative Study Between First-party and Third-party Two-wheeler Insurance

Below is the chart giving a comparative study between first-party and third-party two-wheeler insurance.

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 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.

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 a bike insurance 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.

Final Thoughts

Understanding third-party two-wheeler insurance cover and its comparison with first-party insurance are essential for you. After all, it will help you in making an informed decision and will also allow you to protect your precious possession. We believe that the above comparative table will help you in differentiating between both the plans to make a wise decision.

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Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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^The renewal of insurance policy is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. Actual time for a transaction may vary subject to additional data requirements and operational processes.

^The buying of Insurance policy is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. Actual time for transaction may vary subject to additional data requirements and operational processes.

#Savings are based on the comparison between highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB.

*TP price for less than 75 CC two-wheelers. All savings are provided by insurers as per IRDAI-approved insurance plan. Standard T&C apply.

*Rs 538/- per annum is the price for third party motor insurance for two wheelers of not more than 75cc (non-commercial and non-electric)

#Savings are based on the comparison between the highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB.

*₹ 1.5 is the Comprehensive premium for a 2015 TVS XL Super 70cc, MH02(Mumbai) RTO with an IDV of ₹5,895 and NCB at 50%.

*Rs 457/- per annum (1.3/day) is the price for the third-party motor insurance for private electric two-wheelers of not more than 3KW (non-commercial). Premium is payable on an annual basis