header Two Wheeler Insurance

Difference Between First-party and Third-party Two Wheeler Insurance

By Vikas Chandra Das
21 July 2022, 11:46 AM

Usually, when we think about insurance, or any other finance-related service, we assume it would be complicated. There are too many technical words and the terms and conditions are difficult to follow. Some even feel they need an agent to help them out when it comes to insurance. However, with the growth of internet, you don’t need to rely on others. In fact, if you are among the people who do not know the difference between a First-party and Third-party in two-wheeler insurance, read on:

Types of Parties Involved in Two-Wheeler Insurance:

A Two-wheeler insurance is a legal agreement. And like every contract, it is between two parties. However, it also consideres its effect on third parties. Before you get confused, here’s a simple explanation of the types of parties in two-wheeler insurance:

1) First Party:

Have you heard the line – the customer always comes first? Well, this is an easy way to understand and remember who is the first party in two-wheeler insurance. It’s you - the customer! When you purchase a two-wheeler insurance policy from a certified insurer, you become the First Party in terms of the contract.

2) Second Party:

The insurance company from whom you have purchased the policy by paying the insurance premium for your vehicle is the Second Party in the contract. The Second Party accepts the premium and offers the policy. Both you as well as your insurance provider are bound by the Policy Wordings. The Second Party assures the First Party that if anything unfortunate happens to the two-wheeler, they will take care of the two-wheeler as per the terms and conditions of the policy.

3) Third Party:

A Third party is someone other than the First and Second party. It can be anyone; for example, a pedestrian walking on the street. These Third Parties can get affected because of your (First Party) two-wheeler. Their property can get damaged because of a two-wheeler accident. In such cases, The First Party is liable to compensate the Third Party. Since the First and the Second Party have a contract in place, the insurer will handle the liabilities as a part of the Third-party Liability two-wheeler insurance.

Difference Between First Party (FP) and Third Party (TP) in Two-wheeler Insurance: 

Here’s a table that differentiates between 1st Party (FP) and 3rd Party (TP) in two-wheeler insurance. It covers five points that shall explain the difference between the two. It is important to remember that the Second Party is the insurance company which has insured the vehicle in exchange for the insurance premium.

ParameterFirst Party Third Party
DefinitionFP is the one who purchases the two-wheeler insurance policy.TP is the one affected by FP’s insured vehicle. It is neither the 1st nor the 2nd Party
ScopeFP can be anyone who owns a two-wheeler and insures it.TP can be anyone who is injured by the insured vehicle or whose property is damaged by the insured vehicle.
InsuranceFP has the option to buy the TP Liability cover or opt for an extensive Comprehensive two-wheeler insurance cover.Although TP injury or damage will be covered to an extent by the FP’s two-wheeler insurance policy, the TP can be proactive and secure oneself financially by opting for a dedicated accident insurance or a health insurance policy.
CompulsionThe Motor Vehicles Act states that FPs must insure their two-wheelers with at least a TP Liability cover. Failing to do so can lead to hefty penalties and/or imprisonment.There is no such compulsion on the TP when it comes to buying an insurance policy.
Accident CoverThe FP receives a Personal Accident Cover of INR 15 lakhs with a two-wheeler insurance policy. This cover is usually bundled with the TP Liability policy and the FP can raise a claim against it based on the stated terms and conditions.In case of an accident, the TP can get compensated based on the extent of the damage faced and as per the judgement of the Motor Accident Claims Tribunal.

First Party Inclusions:

The list of inclusions will be mentioned in detail in the respective policy’s Policy Wordings. Overall, here are some points that highlight the instances for which First Party insurance will cover the insured vehicle:

  • Claim raised against an incident that is not covered by the policy.
  • Claim raised for an incident that occurred when the policy had expired.
  • Driving in a drunken state.
  • Driving without a valid driving license.
  • Using a private vehicle for commercial purposes like transporting passengers or illegal activities like racing.

Third Party Inclusions: 

In case you purchase a TP-only policy, you will be offered a Personal Accident Cover and a Third-party Cover. Here, a specific type of permanent injury to the owner/driver and claims raised against FP by the TP shall be covered as per the terms and conditions.

A Comprehensive plan shall cover the insured car with the above-mentioned points as well as offer Own Damage cover against fire, flooding, vandalism, theft, etc. Zero Depreciation, Return to Invoice, and roadside assistance as some of the Add-on covers that can be availed with a Comprehensive plan.

Should You Opt First-party or only Third-party Two Wheeler insurance policy?

First Party Two-Wheeler Insurance offers a combination of both a third-party cover and an own damage cover. a First Party Two-Wheeler Insurance provides your bike an extensive coverage by covering for everything from third-party related liabilities to damages to your own bike due to unforeseen circumstances such as natural calamities, accidents, etc. 

Additionally, you can also opt for one or a combination of various add-ons to give your two-wheeler an improved coverage. Hence, it is preferrable to have a valid first party two wheeler insurance at all times. 

Frequently Asked Questions:

1. Initially, I had purchased a TP-only policy. Now, I want to switch to a Comprehensive plan. How can I do it?

You can switch to a Comprehensive two-wheeler insurance plan at the time of renewing the policy. Simply visit your preferred insurer’s website or an aggregator to buy a Comprehensive plan for your two-wheeler a few weeks before your policy expires. 

2. Why is the premium for TP policy the same across insurers?

The TP policy’s premium is guided by IRDAI and insurers cannot charge a higher or a lower amount for it. It is a standardised policy, therefore the premium is the same.

3. Will an FP insurance policy compensate me for the damages caused to my two-wheeler if a tree branch falls on it and breaks the windshield?

Yes, Comprehensive two-wheeler insurance plans do cover such instances subject to terms and conditions.

4. I want to purchase the Zero Depreciation Add-on from my insurer but I don’t want the Comprehensive plan. I just want the TP cover and the Add-on. Is it possible?

No, Add-ons cannot be purchased with a TP-only plan.


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