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What Are 1st-Party, 2nd-Party & 3rd-Party Bike Insurance Plans?
You must be adequately knowledgeable about insurance terms if you purchase bike insurance online.
For instance, if you are about to book or renew a policy for the first time, it is expected that you will need some clarification related to what are 1st party, 2nd party and 3rd party bike insurance.
In this article, you can decipher each term in detail, along with the differences between first-party and third-party bike insurance plans.
What is First Party in Bike Insurance?
In bike insurance, 'first party' denotes the policy's owner. As per the standard regulations, you get promised coverage if any accident occurs within the policy period. Whenever you go for a 1st party or comprehensive bike insurance, the coverage is disbursed against the damages dealt on your motorcycle. Hence, sometimes, these contracts are also referred to as ‘Own Damage’ cover.
These plans protect you against financial loss occurring from:
- Accidental damages
- Man-made calamities
- Natural calamities
- Theft
- Total loss (it is a typical scenario when the repairing cost exceeds your bike’s IDV)
Eventually, two parties interact in a first-party insurance - you and your insurer. As soon as you raise a claim, the insurance company evaluates the situation and furnishes the compensation based on policy terms.
What is the Second Party in Bike Insurance?
In bike insurance papers, you will never notice the term ‘second party’. Suppose you have decided to buy two-wheeler insurance. In this case, the term ‘second party’ simply represents your insurance company.
As per law, if you have duly renewed or bought a new vehicle insurance plan, the 2nd party is liable to acknowledge the claim. However, the insurer will conduct a proper check to evaluate whether the situation justifies the terms and conditions of the insurance.
What is Third Party in Bike Insurance?
The term 'third party' refers to anyone except the insurance provider and the policy owner. They can raise a claim against your insured motorcycle to cover the monetary loss caused to their belongings or against mishaps that lead to injuries or death.
Thus, a 'third party bike insurance' or 'TP policy' compensates third-party liabilities. Booking and renewing your 3rd party policy to continue driving legally in India is mandatory.
What Are the Differences Between First-Party and Third-Party Bike Insurance?
Discussed below are the differences between first-party and third-party bike insurance plans.
Factors |
First-Party Bike Insurance | Third-Party Bike Insurance |
| Coverage | Covers repair and replacement costs incurred for the bike owned by the policyholder. The loss can be due to an accident, natural or man-made calamities, theft, etc. | Compensates only third-party liabilities, i.e., damages to someone else’s vehicle or property or their demise. |
| Premium | Premium is lesser compared to that of third-party insurance. It is determined based on your motorcycle's market value, model, present location, etc. | Premium is determined according to the bike engine cc. |
| Exclusions | The following instances are overlooked in standard comprehensive bike insurance:
|
Third-party policies do not pay for your loss. Also, if you are found riding without proper documents or under the influence of any intoxicating substance, these policies turn out to be null. |
| Claiming Party | You directly raise claims with the insurer offline via an agent or through their website or mobile app. | The third party involved in the incident raises the claim. |
| Policy Modification Options | You can select several add-ons like no-claim bonus protection cover, zero depreciation cover, and many more. These elements enhance the base plan. | There are no means to modify a base plan. |
| Claim Settlement Body | Your insurer directly settles the bills. | Motor Accident Claims Tribunal Court resolves the issue. |
What Are the Mandatory Insurance for Two-wheelers in India?
As per the Motor Vehicle Insurance Act of 1988, you must own third-party bike insurance to ride a bike legally in India. It pays for the third party's financial loss, medical bills, or loss due to death resulting from a road accident.
As you have understood what 1st party, 2nd party and 3rd party bike insurance is, you will probably be convinced that comprehensive and third-party policies are essential to ensure broader coverage. While the latter is compulsory, an 'own damage cover' helps sustain your liabilities, which may be immense following an unfortunate accident.
FAQs about Different Parties in Bike Insurance
What is the difference between premium and IDV in bike insurance?
In bike insurance, a premium represents the cost of the policy. On the other hand, the Insured Declared Value or IDV stands for the total insured amount. The maximum compensation is calculated based on your bike’s current market value.
Should we keep IDV in bike insurance high or low?
Choose an IDV that complements your motorcycle's current market value. Otherwise, going for a too-high IDV unnecessarily attracts a hefty premium. On the other hand, opting for a much lesser IDV can get you in trouble in case of an unfortunate accident or theft.