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Top Benefits of Third-party Bike Insurance

By Juhi Walia
21 July 2022, 10:24 AM

Third-party bike insurance is a basic but compulsory insurance policy that riders must have. In its absence, you may have to pay a fine of INR 2,000 if caught by the traffic police. Subsequent offences would double the fine amount. You can even be imprisoned for three months. But its utility is beyond this. It is also aimed at shielding you from sudden monetary expenditure that may come your way if you accidentally cause damage to the property of or injure an individual while riding the bike. So, this bike insurance policy keeps your financial health sound and ensures a stress-free ride. In this post, we will take you through the benefits of a third-party bike insurance policy. Let's get started!

Key Advantages of Third-party Bike Insurance

Protecting your bike ride with third-party bike insurance spells several benefits for you. These have been discussed below.

Fulfillment of the Legal Requirement

The Motor Vehicles Act, 1998, says you cannot ride a bike on Indian roads without third-party bike insurance. By purchasing this insurance,

  • You comply with the legal stipulation of this act.
  • You will not be penalised by the traffic police.
  • You remain immune from punishment for not having third-party insurance, i.e., a fine of INR 2,000 and/ or three months of imprisonment.

Compensation by the Insurance Company in Case You Injure or Cause Death to Someone by Your Bike

You cannot predict what will happen on the road. Even if you are observing traffic rules, others may not be respecting them. Hence, there is a possibility that your bike may hit someone. This is where third-party bike insurance has an important role to play.

A third-party bike insurance policy compensates the accident victim on your behalf if

  • S/he dies due to injury caused by a collision with your bike.
  • S/he becomes a cripple or is grievously injured by the impact of the bike hit.
  • S/he gets bodily affected (permanent total disability) in a way that s/he cannot pursue professional responsibilities, which results in loss of income.

The bike insurance company will

  • Pay the medical expenses incurred for the treatment of the injured person.
  • Reimburse a justifiable amount to compensate for the loss of income.
  • Offer monetary help for the funeral and other costs of the deceased person as well as compensate the dependents.

Helps Pay for the Third-party Property Damage 

If, during an unfortunate accident, your bike causes damage to the property of a third party, adequate compensation for restoration or repair of the same shall be paid by your insurance company. The property can be a third party’s vehicle, house, or any other belonging.

Based on the assessment of the insurer’s surveyors, the third party can get up to INR 7.5 lakhs. You won’t have to face any legal issues.

Coverage for the Cost of Legal Liabilities 

Third-party bike insurance will cover the cost of the legal proceedings if a case is filed against you by

  • The person who has been injured by your bike.
  • Relatives of the person who passed away due to a collision with the bike.

A Personal Accident Cover Will Protect You

The third-party bike insurance also offers monetary help through a personal accident cover. It is possible that during an unfortunate accident, you may also sustain injuries. In that case, the policy will offer financial support to the extent promised in the agreement for:

  • Permanent disability resulting from the accident.
  • Bearing the expenses of medical treatment for fast recovery.
  • Fulfilling the monetary needs of your dependent if the accident results in death.

Read more - Advantages of Personal Accident Cover With Two-wheeler Insurance

Cost-efficient Coverage of Liabilities

The Insurance Regulatory and Development Authority of India (IRDAI) regulates the premiums of third-party bike insurance policies sold by different companies. This ensures that the premium value is affordable for people of all income groups.

You can shield yourself from unpredictable expenses that must be borne due to third-party-related issues on the road by paying a nominal value. 

Process of Compensating the Victim through Third-party Bike Insurance Claims

If your bike has hit a person on the road resulting in his injury, death or damage to his property, you need to follow the steps mentioned below to compensate him through your insurance policy.

  • You or the victim needs to register the First Information Report (FIR) at a nearby police station.
  • You must share the details of your third-party bike insurance policy with the victim.
  • The victim will register the bike insurance claim with your insurer.
  • You must also inform your insurer about the accident immediately.
  • After verifying the claim, the insurer will transfer the case to the Motor Accident Claims Tribunal.
  • The tribunal will send a legal notice to you based on the victim’s FIR.
  • Inform the insurance company, and the company's legal counsel will look after the case proceedings on your behalf based on the policy’s terms and conditions.
  • The tribunal, after hearing both the aggrieved and accused parties, shall fix the compensation amount, factoring in all aspects.
  • Your bike insurance company will pay the compensation amount to the victim.

The Scale of Compensation Under a Third-party Bike Insurance Plan

The norms laid down by the IRDAI determine the compensation amount for the third party. Third-party property damage can be covered for up to INR 7.5 lakh. Whereas death or permanent disability of the third party has no predefined limit. The court decides the same based on the hearing.


You must purchase a third-party bike insurance policy before going out for a ride on your bike. This is legally binding and also assures you complete peace of mind. Accidents cannot be predicted but let them not take a toll on your financial and mental well-being.

Read more -


1. If I don’t protect my ride with third-party bike insurance, can there be legal implications?

Yes, as per the Motor Vehicles Act, you will have to pay a fine of INR 2,000 and/ or a jail term of three months if caught without third-party insurance while riding your bike.

2. If an accident with my bike results in the death of a third party, how much compensation would be paid by the insurance company?

There is no limit as such. The court decides the compensation amount.

3. What is the process of third-party compensation after an accident?

The aggrieved party will lodge an FIR at the local police station, collect the insurance papers from you, inform the insurance company, and get the case heard at the Motor Accident Claims Tribunal, which will determine the compensation amount. Your insurance company will then pay the finalised amount to the victim.

4. Is the premium of third-party bike insurance linked to the bike’s engine capacity?

Yes. Since 1st April 2018, IRDAI had been standardising the premium amount w.r.t engine capacity. Recently, the IRDAI has notified third-party bike insurance premium rates for FY 2022-23. For bikes with less than 75cc, the premium is INR 538; the premium is INR 714 for more than 75cc to 150cc bikes; the premium is INR 1,366 for above 150 to 350 cc bikes, and INR 2,804 if bike capacity is more than 350cc. These are base premium rates. Taxes (if any) will apply further to the same. Remember, the rates are revised every year

5. Third-party bike insurance compensates the victim for what kind of losses?

The compensation will be paid to the victim by the insurer for death, grievous injury and property damage.

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