Third-Party v/s Comprehensive Two-Wheeler Insurance

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The Motor Vehicles Act,1988 has made it compulsory for all two wheeler vheicles that run on the road to have a two-wheeler insurance plan.

However, you have the option to choose between third-party and comprehensive insurance. If you own a two-wheeler or are planning to buy one soon, it is imperative that you understand the difference between the third-party and comprehensive two-wheeler policy, so that you can choose the one that is suitable for you.

We would discuss all third-party and comprehensive insurance plans, their meaning, their differences and also their utility. Plus, a comparison table to understand the difference between them so that you can make a smart decision.

Third-Party Vs Comprehensive Two-Wheeler Insurance

Bike insurance can be done in two ways, let's take a look at them both:

Third-party Liability Insurance 

When we talk about third-party, it includes:

  • The first-party is you, the car owner and policyholder.
  • The second-party is, the two-wheeler insurance company.
  • Any other person or property apart from above two becomes the third-party.

Thus, in this policy, only the third-party bodily injury and property damages that are caused by your insured bike are covered.

The financial liabilities that arise because of the following situations will be covered by your third-party bike insurance

  • When a person is injured due to collision with your bike.
  • When a person gets injured due to the accident.
  • When a person’s property or a vehicle is damaged because of the accident.

Features of a Mandatory Third-Party Two-wheeler Insurance Policy 

The highlighting features of third-party insurance are:

  • The bike insurance company will cover the third-party damages, not own-damages.
  • The premiums for third-party bike insurance are fixed by the IRDAI and followed by all insurance companies.
  • The charge of the premium is fixed on the basis of your bike’s engine cubic capacity.
  • The rates are, however, not fixed and can be revised by the IRDAI from time to time.
  • When a claim is made, it is taken care of by the Motor Accident Claims Tribunal (MACT).

Benefits of Third-Party Two-Wheeler Insurance

Legal Necessity

Under the Motor Vehicles Act, 1988 having third-party insurance for your two-wheeler is mandatory. Not having one can put you in legal trouble along with a penalty

Easy Processing

Almost all of the two-wheeler insurance companies now provide third-party plans online. This makes buying, renewing, and making a claim very easy and convenient.

Customer Care

24x7 customer support can prove very helpful in providing all kinds of insurance-related guidance.

Most Reasonable

As companies have to follow the IRDAI’s guidelines about the premium, the premium for third-party bike insurance is the same. Also, it is cheaper as it does not cover the vehicle's own damage. 

Long-Term Cover

The two-wheelers that were purchased after 1 September 2018 have to buy third-party insurance for a period of 5 years

Comprehensive Two-Wheeler Insurance

As the name suggests, the comprehensive policy has a much wider scope and it covers the damages that you cause to the third party as well as the insured vehicle’s own-damages. As the policy offers more benefits, it also costs more than third-party insurance.

Comprehensive two-wheeler insurance will provide a cover to your two-wheeler if it gets stolen or gets damaged due to an accident, or due to perils that may be natural or man-made. You will receive compensation not just for own-damage but also the damages caused to the third-party.

Features of Comprehensive Two-Wheeler Insurance 

  • Comprehensive two-wheeler insurance is a combination of third-party and own-damage.
  • The policy has a much wider scope of coverage than the third-party cover, so it more costly than a third-party bike insurance policy.
  • Comprehensive two-wheeler insurance would provide you with a cover against damages :
    • Due to accidents.
    • Due to bike theft.
    • Due to fire.
    • Due to natural and man-made perils.
    • Personal injuries or death.
    • Third-party bodily injuries and property damages are also covered.
  • Optional Add-on covers help to customise the bike insurance and increase the coverage.

Benefits of Comprehensive Two-Wheeler Insurance

All-Inclusive Policy

As mentioned above, almost all kinds of accidental damages to your bike would be covered by a comprehensive insurance policy, such as a collision, theft, man-made or natural disaster.

No-Claim Bonus (NCB)

When you do not make a claim throughout the policy year, the insurance company gives you a bonus in the form of a discount. This discount ranges from 20% to 50% based on the number of claim-free years; NCB can be availed at the time of renewal. 

Customise your Plan with Add-Ons

Accidents can happen anywhere and at any time, keeping your bike well-covered becomes easier with the wide range of add-ons available. For example, when your bike is brand new, buying a Zero-Depreciation will help manage the loss due to depreciation. In case you opt-for Engine Protect, the insurance will cover the engine of the bike too, which is otherwise not included in the base plan.

Easy Processing

From the purchase to the renewal to claim process, everything is very easy with the online system. Online tools like Premium calculator help you compare the cost of different policies and you can then buy what you want in a few minutes.

Affordable Repairs

A comprehensive insurance plan may seem a little expensive when compared with third-party insurance but there is a reason for it. The cover it offers is extended and thus is the price. However, the cost would be way less than what you might have to spend in case your bike undergoes repair without a comprehensive policy.

Protection Against Theft

In case your two-wheeler gets stolen and the police are unable to trace it, your insurance company will compensate you on the basis of the two-wheeler’s IDV.

Peace of Mind

Life is unpredictable, but with the right bike insurance plan, you will be well-equipped to manage the finances in case of a bike accident. Your two-wheeler insurance surely brings with it peace of mind.

Difference Between Third-Party v/s Comprehensive Two-Wheeler Insurance

Let us now take a look at the differences between the two policies as it would help us understand them better:

Parameters

Third-Party Liability Bike Insurance

Comprehensive Bike Insurance

Cover Provided

Only third-party liabilities are covered

Covers third-party liabilities along with own-damages

Need for the Plan

Mandatory 

Optional

Premium

The IRDAI fixes the premium for the policy as per the bike’s engine cc, and all insurance companies offer the policy at similar rates

Premiums are fixed by the company itself and therefore may vary from company to company

Add-On Covers

No such options are available

An array of add-ons are available for you to choose as per your requirement 

Calculation of Premium

Depends on the capacity of the bike engine

A lot of determining factors such as engine capacity, MMV, registration details

No-Claim Bonus

Does not exist

Not making a claim can get you a bonus

Policy Tenure 

Bikes bought after September 1, 2018 need to buy cover for 5 years. Others can buy it for 2 to 3 years

Can be bought for a period of 2 or 3 years. Long-term cover is optional

Affordability

Premiums are quite low

Premiums are comparatively higher and determined by a number of factors 

Reasons to Opt for Comprehensive Two-Wheeler Insurance

When you have to buy insurance for your two-wheeler, doing it just because it is mandatory may not be the right approach. Having the right insurance plan will go a long way in keeping your finances safe. Accidents may not always be avoidable, no matter how trained a rider you may be, you may get involved in an accident because of someone else’s fault too. Therefore, it is highly recommended that you understand the basics of two-wheeler insurance and then make an informed decision.

It has been well-established that having comprehensive two-wheeler insurance policy can prove to be way more beneficial than third-party liability insurance. When an accident happens and you hit something or hurt someone, it is obvious that your bike would also suffer some damage. Or if the damage occurs due to fire or a natural or man-made disaster, third-party insurance would not be able to cover your own-damages.

So, before you make a decision about buying insurance for your two-wheeler, weigh all the pros and cons of both the policies and then choose a two-wheeler policy that suits you and your requirements the best.

Things to Consider Before Buying Comprehensive Two-Wheeler Insurance

There are many attractive features in a comprehensive two-wheeler insurance policy, however, when buying such a plan, do not forget to consider the following points:

1. Your Requirements

Weigh your insurance requirements before investing. If you are renewing insurance for an old bike whose own-damage is not your priority, you may opt for third-party insurance. But if it is a new bike, then you should opt for a comprehensive policy only.

2. Coverage

Third-party liabilities and own-damage are covered under all comprehensive policies, however, you must look-out for any other in-built features that a plan may be offered.

3. Add-Ons

A big benefit of comprehensive insurance is the option of add-ons. Make sure to check the availability of any particular add-on that you are looking for.

4. No Claim Bonus

NCB can go up to 50%, however, you must check the same from the insurance company. You may also want to find out if NCB Protect cover is available so that even if you make a claim, your NCB will be secure.

5. Insured Declared Value 

IDV is the market value of your two-wheeler. It is this value that you would receive in case your two-wheeler gets stolen or it gets for a total loss.

6. Premium Amount

Various factors have an effect on the premium of your bike insurance. For example, when you opt for add-ons, the premium charges go up too. Settle on a premium that offers good coverage and is suitable for your budget.

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