Is Third-party Two-Wheeler Insurance Really Useful?
- Author :
- TATA AIG Team
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In India, the Motor Vehicles Act 1988, has made it mandatory for every bike to have a third party bike insurance policy. When you purchase third-party insurance for 2 wheeler, the insurer offers coverage for third-party liability arising due to an accident involving the insured bike. However, these policies do not offer a cover for damage to the insured bike. This leads to the question, is a third-party bike insurance policy really useful? In this article, we will talk about third party bike insurance and look at its pros and cons to help you decide.
Understanding Third-party Bike Insurance
Third party insurance for bikes is mandatory in India. This is a basic policy that offers coverage for third-party liability only. This means that if you injure a third person or damage the property of a third party while riding your bike, then the policy will offer legal and financial protection. Before we delve further, let’s understand a little more about who is a third party. In bike insurance, there are three parties:
- First Party is you, the policyholder. You purchase a bike insurance policy from an insurance company to get coverage for the agreed damages under certain terms and conditions.
- Second Party is the insurance company that provides the coverage.
- Anyone else in the world is the third party.
When you cause an accident and damage the property of a third party or cause physical injury to a third person, the law requires you to compensate the affected party. A third party bike insurance policy helps cover the losses during such incidents.
The compensation to be given to the third party depends on a range of factors. The Motor Accident Claim Tribunal (MACT) determines the compensation amount for injuries and death during such accidents.
Importance of Third Party Bike Insurance in India
Here are some benefits of third party insurance for a bike:
- Medical treatment costs
Accidents can lead to injuries that can require medical attention and even hospitalisation. Depending on the severity of the injury, the costs of medical care can sky-rocket in no time. If your bike causes an accident resulting in a third-party person getting injured, then you are required to take care of all the medical treatment expenses. With third party insurance for 2 wheeler, the insurance company will cover all such costs.
- Disability or death of a third-party person
Road accidents can be dangerous and result in disability or death too. If the insured bike causes an accident resulting in the disability or death of a third-party person, then the MACT determines the compensation amount based on the life expectancy of the affected person. This can be a huge amount. With a third-party liability cover, the insurance company covers such costs too.
- Legal liabilities
If your bike causes an accident and the affected party files a police case or a court case, then you will have to hire a lawyer to represent you. The legal bills can start piling up quickly. With a third party bike insurance policy, the insurer manages all these costs for you.
- Personal Accident Cover
The Insurance Regulatory and Development Authority of India (IRDAI) has made it mandatory for all bike owners to have a personal accident cover along with third-party insurance for 2 wheeler. This offers compensation to the family of the policyholder in the event of his death or disability.
Disadvantages of Third Party Bike Insurance
Here are some disadvantages of third-party two-wheeler insurance:
- No coverage for damage to the insured bike
A third party policy offers coverage for third-party liabilities only. Hence, if the insured bike is involved in an accident resulting in damage to the third-party vehicle and the insured bike, then the third-party policy will offer coverage only for damages to the third-party vehicle. The policyholder will have to manage the costs of repair of the insured bike himself. To get coverage for his bike, he will need to purchase a comprehensive bike insurance policy or a standalone own-damage bike insurance plan.
- Not customizable
The IRDAI determines the coverage that all insurers need to offer under a third party bike insurance policy. Hence, you cannot pay extra and get more coverage with this plan.
What Type of Policy Should You Opt for?
While going through the features of third party insurance for bikes, it is easy to understand that these policies are designed to offer coverage for third-party liabilities only. While there are many factors that explain the importance of third party insurance for a bike in India, the biggest drawback is the lack of coverage for the insured bike. The third party bike insurance price is determined by the IRDAI along with the details of the coverage. Hence, when you buy a third-party policy, you get coverage only for third-party liabilities.
However, if you opt for a comprehensive bike insurance policy, then you get coverage for third-party liabilities and damages to the insured bike too. While the premium is higher than a third-party bike insurance policy, it offers better coverage. Here are some scenarios where you must consider buying a comprehensive two wheeler insurance plan:
You are an amateur rider – If you are new to bike riding, then the chances of accidents, collisions, and mishaps are higher. This also increases the possibility of damaging your bike. Hence, a comprehensive bike insurance policy is a better option.
You don’t want to worry about bike repair costs – If the costs of repair bother you, then opting for a comprehensive plan can offer peace of mind since the insurer covers most of the repair costs for damages caused due to accidents, collisions, natural calamities, man-made disasters, fire, and theft.
Tata AIG offers third party bike insurance, standalone own-damage insurance, and comprehensive bike insurance plans. You can purchase any of these policies in a hassle-free manner. But, before you buy the policy, we suggest you compare two wheeler insurance on Tata AIG’s website and choose the one that best suits your needs.
Besides being a mandatory requirement, third-party insurance protects you from financial losses due to third-party liabilities caused by any accident involving your bike. Even if you are a safe driver, accidents can happen and create financial obligations if a third-party property gets damaged or a third person gets injured. With a third party bike insurance policy, you can be assured of the insurer taking care of such costs.
Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.