In India, it is illegal to ride a two-wheeler without an active third-party bike insurance policy. The Motor Vehicles Act, 1988 has made it mandatory for all two-wheelers to have a third-party liability cover. If your bike meets with an accident and causes damage to a third-party person or property, then legally, you are required to compensate the said third party for the damage caused if your bike has caused the accident. A two wheeler insurance third party policy offers legal and financial protection in such situations.
Most insurance providers offer two types of bike insurance policies:
- Third-party policy for two-wheelers – that offers coverage for damage to a third-party person or property due to an accident caused by the bike of the policyholder
- Comprehensive insurance for two-wheelers – that offers coverage for damage to a third-party person or property and to the bike of the policyholder plus injuries sustained by the policyholder due to an accident caused by the policyholder’s bike.
Features of a Third-party Bike Insurance Policy
Third-party bike insurance policies are designed to offer bike owners protection from expenses arising from third-party claims. The claims might have occurred to compensate for any third-party damages caused in an accident involving your bike. But, who is a third party? Let’s understand.
In a bike insurance policy, there are three parties to the policy:
- The insured or the First Party – The insured two-wheeler is the first party to the policy
- The insurer or the Second Party – The second party to the policy is none but the insurance provider.
- Third-Party – If the first party causes damage to anyone who files a claim with the second party, then such a person becomes the third party to the policy
Inclusions and Exclusions of a Third-Party Bike Insurance Policy
When you purchase a third-party two-wheeler bike insurance, the insurer offers coverage for damages to third-party property or person only. This includes injuries or death caused to a third person by your motorcycle. However, these policies do not offer coverage for damages sustained by the insurance-covered two-wheeler or injury to the policyholder in the accident. Also, if you lose any belongings in the accident, then the policy does not offer coverage either.
Price Estimate of a Third Party Bike Insurance
The Insurance Regulatory Development Authority of India (IRDAI) determines the premium of a third-party bike insurance policy. All insurance providers are mandated to provide third-party liability cover at these fixed premium rates. The IRDAI calculates the premium based on the engine capacity of the two-wheeler. Here are the premium rates for third-party bike insurance proposed in April 2022.
- If the two-wheeler has an engine capacity of less than 75cc, the annual premium for a third-party bike insurance policy is ₹
- For two-wheelers with an engine capacity of 75-150cc, the annual premium for a third-party bike insurance policy is ₹714
- For two-wheelers with an engine capacity of 150-350 cc, the annual premium for a third-party bike insurance policy is ₹1366
- If the bike’s engine capacity is more than 350cc, then the annual premium for a third-party bike insurance policy is ₹2804
Personal Accident Cover
The IRDAI or Insurance Regulatory Development Authority of India has made it mandatory for all two-wheeler owners to have a Personal Accident Cover even with a third-party bike insurance policy. The cover needs to be for ₹15 lakhs.
Most insurers offer an affordable premium at around ₹750 with Personal Accident Cover. This offers coverage for medical expenses, and hospitalisation, if the policyholder gets injured in an accident involving the insurance-covered bike. It also offers financial support in the event of partial or permanent disability or death of the policyholder.
Summing Up
As you can see, when you opt for third-party insurance for your two-wheeler, the premium is determined by IRDAI. Hence, insurers cannot charge the premium they want. However, before you purchase a bike insurance policy, make sure you compare bike insurance benefits to find the best one that suits your needs. Good Luck!