November 28, 2022
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Business

First Party vs Third Party Two-Wheeler Insurance

As a bike owner, there are different documents that you should always carry with yourself. Your driver’s licence indicates you are legally allowed to ride a bike anywhere in the country. Your bike’s registration certificate (RC) which shows that the bike has been registered with the RTO and is under your ownership. The PUC of your bike to show that the emission levels of your bike are under the legal limit.

One document you cannot overlook, however, is the bike insurance. If you are planning to buy bike insurance online, you might come across terms such as first party and third party. They can be confusing at times, and we have listed below a few differences among them.

Who is a first party in two-wheeler insurance?

In insurance terminology, first party means the policyholder; the owner of the bike who has purchased the insurance is the first-party. First party is the one who pays premium for the policy, under which they and their bike get coverage from on-road perils.

Who is a third-party in two-wheeler insurance?

Third-party is the external person who gets affected in a mishap involving the first party. When you purchase a third party bike insurance, the policy will ensure coverage for third parties in the event of an accident.

What are the differences between the two?

To get a better understanding of both, listed below are the key differences between first party and third-party:

1. Coverage

The coverage is the major dividing factor in first-party and third-party insurance. First-party insurance provides financial coverage to both the owner of the bike and third-party as well. If the bike of the first party gets damaged in an accident, natural or man-made calamity, their policy will cover the cost of repairs or compensate them in the event of a loss of the bike. It will also compensate the third party for damages caused to their vehicle or property, injuries and even fatalities. On the other hand, third-party insurance only covers third party damages, and does not compensate the policyholder. However, a third-party insurance cover is a mandatory requirement by law for all vehicles.

2. Add-ons

An add-on is an extra feature that you can include in your two-wheeler insurance to get added coverage. Add-ons that you can include in your insurance are Zero-depreciation cover, No claim bonus (NCB) cover, 24X7 roadside assistance cover and Engine protection cover. It is important to note that these add-ons are only available with first party insurance. If you purchase third-party insurance, you will not get any add-ons.

You can visit the official website of IRDAI for further details.

3. Pricing

A major difference between first-party and third-party insurance is their price. Bike insurance price is dependent on which insurance policy you opt for. If you purchase a first-party insurance, each insurer will quote a different price. When you include add-ons in the policy, this could further increase the price of the insurance as they are customisable features and not included in the policy by default. The price of third-party insurance is fixed by IRDAI and is the same across all the insurers. *You can visit the official website of IRDAI for further details.

If you want to ensure the best coverage for your bike, and want to purchase bike insurance online, make sure to remember the definitions and differences between these two types of policies.

* Standard T&C Apply

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.