The Motor Vehicles Act of 1988 makes it mandatory for all two-wheelers to have a third-party policy for two-wheelers in India. These policies are designed to protect the bike owner from third-party liabilities arising from an accident caused by the insured bike. When you buy a two-wheeler, it is important to think about the two-wheeler insurance policy that you want to protect yourself from financial liabilities. There are different types of bike insurance policies available like a comprehensive policy, own damage policy, and third-party bike insurance policy. Typically, a two-wheeler bike insurance plan is valid for one year. However, you can opt for long-term two-wheeler insurance to avoid the stress of renewing it every year. In this article, we will discuss the risks you are protected from by a bike insurance third-party policy.
Understanding Third-party Bike Insurance
In bike insurance, there are three parties:
- First Party – The policyholder is the first party
- Second Party – The insurer is the second party
- Third Party – Anyone else is the third party
When you ride your bike and cause an accident, it can damage the property of a third party and/or cause injuries. In such cases, you are liable to pay for the repairs and/or medical treatment costs. Sometimes, the court might ask you to pay compensation to the affected third party too.
When you buy third-party two-wheeler insurance, the insurer offers coverage for all such costs. Hence, you can manage these incidents without derailing your finances.
What Does Third-party Bike Insurance Cover?
A third-party bike insurance policy offers the following benefits:
● Legal liability cover
If your bike causes an accident that damages a third-party person and/or property, you might have to face a police case or be present in a court of law. This could involve legal fees and compensation payments. A third-party bike insurance policy offers coverage for all such legal costs.
● Disability or death compensation
Suppose the accident caused by your bike results in a third-party person getting disabled or killed. In that case, you will be legally liable to compensate the individual’s family members based on his/her life expectancy. This compensation amount is also covered by the third-party policy.
● Medical treatment costs
If your bike injures a third-party person, then you are required to bear the expenses of the medical treatment and/or hospitalisation. These costs are also taken care of by a third-party bike insurance policy.
● Personal accident cover
The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that all bike owners purchase a Personal Accident Cover and a third-party bike insurance policy. This compensates the family of the bike owner in case of disability or death due to an accident involving the insured bike.
Exclusions of a Third-party Bike Insurance Policy
Here are some drawbacks of a third-party two-wheeler insurance policy:
- No coverage for damages to the insured bike. This policy only covers third-party liabilities arising due to an accident/collision caused by the insured two-wheeler.
- These policies are usually standard and non-customizable. While you can choose add-on covers and customise a comprehensive bike insurance plan, third-party bike insurance options are not available.
While third-party bike insurance is mandatory for all two-wheelers, many bike owners are unaware of the exact coverage offered by these plans. Before you buy a policy, ensure that you understand the inclusions and exclusions along with the terms and conditions set by the insurer. Also, while the third-party plans are standard, make sure that you compare the quality of services offered by the insurers before signing the dotted line. Good Luck!