Every bike needs to be insured, and, generally, most of us tend to buy a third-party insurance policy for our bikes. Whether you caused the damage or someone else did, a third-party insurance will come into the picture. This is bike insurance policy that protects you against any liabilities that may arise as a result of any loss or damage you may cause to a third-party vehicle, person, or property.
In third-party bike insurance, the insured is the first party, the insurance company is the second, and any person that will get into the situation to claim against any damage happening to them because of your vehicle is the third party.
What Does Third-party Policy Mean?
Third party insurance policy does not protect you or your bike, but does compensate for your legal duties. The claim only covers your duty to a third party in the case of death, bodily harm or property damage.
Suppose you hit a rider and he gets injured because of you; he can claim the damage recovery from you. The bike insurance company is liable to give him the recovery, not for the damages that happened to you.
What Does it Cover?
- It pays for the other person's medical bills if they are injured.
- It provides coverage for the third party's temporary/permanent disability or death.
- It pays for third-party vehicle damage.
- It compensates for lost income owing to disability.
- It covers any harm to a third party's property.
What Does Your Third-party Bike Insurance Compensate for?
A third-party insurance mandates you to pay a premium — the rate that is determined based on the engine capacity of your motorcycle, and these prices are set by the Insurance Regulatory and Development Authority of India (IRDAI) and are periodically changed.
When you are accountable for a third party’s injuries or property damage, the latter is reimbursed with either a portion or the entire sum guaranteed, depending on the nature of the harm.
- According to the IRDAI, property damage would be covered up to a maximum of INR 7.5 lakh. But, if there is any damage to the property, the surveyor must provide the report along with that of a bike inspection at the outset to determine the value of the loss sustained. In addition, you must produce the original invoices from an authorised service centre. The third-party bike insurance claim will not be completed if the process is not followed.
- Medical expenses sustained by a third party will be paid. If they sustain any damage or loss, they can make a claim for any medical-related expenditures, and if the injury is severe enough that they are unable to return to work, they can make a claim for loss of wages. Furthermore, if any bodily deformity occurs, compensation will be offered.
- In the event of the third party’s unexpected and unintentional death, the sum decided by the Court will be paid in full.
- If the third person suffers a permanent impairment, they will get the entire sum promised. In the event of permanent or total impairment as a result of an unanticipated incident, compensation will be granted when a claim is made.
- If the injuries result in the loss of both limbs or sight in both eyes, or the loss of one limb and sight in one eye, the third party will be compensated in full. If they lose one limb or sight in one eye, they will receive half of the amount insured.
What Doesn’t it Compensate for?
While it is clear that a third-party policy covers many crucial circumstances, there are some instances when this insurance will not protect you. Among them are:
- In the Event of Damage to Your Own Vehicle — A third-party insurance policy will not cover any damages to your own bike, such as caused by accidents or fires.
- If You Avoid Following the Road Safety Rules — you will not be protected if you are involved in an accident while breaking the law, such as driving intoxicated or without a valid driving licence.
- When You are not Using it in a Right Way — If you use your vehicle for a purpose that is not covered under your bike insurance, such as driving outside of the geographical limit or utilising a personal vehicle for commercial reasons.
- Having an Out-of-date Policy — This one is probably self-evident. If you fail to renew your insurance after it has expired, you will not be insured.
What Effect Will Claiming Have on Your Third-party Insurance Policy?
The amount your bike is covered for will not change because the third-party insurance policy is different from the own damage policy. There is no cap on the liability coverage provided by this policy for harm to people or death. However, there is a cap of INR 7.5 lakhs on the coverage provided for damage to property. Of course, your future insurance will be affected if you file a third-party insurance claim, on these factors:
- The Premium — When you file a vehicle insurance claim, your renewal insurance premium will go up as a result. In other words, being involved in an accident and filing a claim might mark you as “risky,” and the higher the risk, the higher the premium you'll have to pay.
- No Claims Bonus (NCB) - Is a type of discount that your insurer will pay you on your premium if you didn’t file any claims during the previous year. This reduction can be anywhere from 20 to 50 percent. It goes without saying that this discount will have to be revoked if you file a claim. Hence, no discounts on policy renewal.
Read more - How to Calculate NCB for Two Wheeler Insurance?
Even a small error in filing a bike insurance claim might result in the rejection of a third-party bike insurance claim. Furthermore, being truthful with the insurance company is the best policy. If you supply misleading information, your claim may be refused.
After reading this, you have a clearer idea of how filing a third-party insurance claim may affect your bike insurance. Given that this kind of insurance is required in India, it's crucial (and practical, too) to understand how it all functions, particularly if you ever find yourself in the terrible circumstance of being in an accident.