Difference Between 1st, 2nd, And 3rd Party Bike Insurance
Purchasing bike insurance needs ample research, strategizing, and also understanding of all the important terms involved in it so that you can select the right insurance plan for yourself. However, before you decide what kind of insurance plan is right for you, you also have to understand a few essential terms that are related to bike insurance.
A few terms include 1st, 2nd, and 3rd party bike insurance. Understanding each of these terms will help you understand which insurance plan is ideal for you. To know about the three different parties of bike insurance and the differences between them, keep reading this post.
What is first-party bike insurance?
The term “first party” in insurance refers to the person in whose name the insurance is purchased. First-party insurance is the complete provision of costs and medical expenses for damages incurred by the bike. It includes coverage against fire, natural calamities, accidents, theft, or total loss.
Two types of people are involved in such cases. One is you and the second is the insurer. Once you have raised a claim, the insurer will make compensations depending on the conditions and terms of your policy.
What is second-party insurance?
Second-party insurance is usually referred to as that party that covers your insurance. In other words, it is your insurance company. Although the first party is expected to pay the premium, it is expected that the second party will compensate for all claims against the policy. But, keep in mind that there is no actual concept called ‘second party bike insurance’. It is just known as a second party.
What is third-party insurance?
Third party bike insurance refers to the person apart from the second and first parties. It could be the person who has raised claims against the bike for losses or damages that have been caused by injuries. The term ‘3rd party insurance’ also refers to insurance that offer coverage against all the 3rd party liabilities.
Comparison
| Factors | First-party bike insurance | Third-party bike insurance |
| Coverage | Provides coverage only to the bike that has been damaged by accident, fire, man-made or natural calamities, theft, etc.
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This covers only the third-party liability. Coverage includes damages that are caused to a third party’s property or in cases caused by the death of the 3rd party. |
| Premium | The rates here depend on the bike’s market value, model, location, etc. | Usually, IRDAI sets standard rates which are much higher when compared with first-party insurance. |
| Nature | The insurer is free to raise direct claims with the help of an insurer. They can also get benefits of the policy depending on the terms and conditions | The claim here is raised by a third-party person. The claims will be related to any damage inflicted on the property or in areas of injury or death. |
| Exclusions | This includes the usual wear and tear. Electrical or mechanical issues may also be involved. People who are driving under the heavy influence of barbiturates will also be held accountable here. | This also includes any damages incurred, driving bikes without using a proper driver’s license, or drinking and driving. |
| Enhancement Of Coverage | One can always go for add-ons if they like. NCB, Zero depreciation covers, road assistance covers, etc are also applicable. | No option to extend or opt for add-on covers. This will also be limited to any 3rd party liabilities and offer no scope to enhance or improve your plan. |
Do note that, both 1st party and 3rd party bike insurances are essential if you are an owner of a bike in India. Although you must insure your bike with a 3rd party liability plan as it is compulsory, getting a comprehensive plan offers you a broader coverage so that you can stay safe even in the