First, Second, And Third Party in Bike Insurance - What Are They

Posted on: Dec 28, 2021 | | Written by:

First, Second, And Third Party in Bike Insurance - What Are They

Published on December 27, 2021. EST READ TIME: 3 minutes

Buying a bike for the first time? Well, you will come across many terms that might seem absolutely alien to you. Any bike insurance policy involves three different types of people who get associated as soon as the insurer issues a policy. Which is why, you will find terms like first party, second party and third-party mentioned in all the three types of standard policies and even in the add-on covers. These are common terms that you need to understand to obtain clarity on a specific policy.

So, what do these terms mean?

• First party – policyholder or buyer of the policy

• Second party – insurance company or the insurer

• Third party – an individual who demands compensation against damage to himself or his property, caused by the first party

Based on these terms, there are first party and third-party bike insurance plans. These are the standard policies that you can buy from an insurer.

First party bike insurance

If you are the bike owner, this insurance covers damage to your bike due to an accident with a third-party or due to non-accidental reasons. The non-accidental reasons consist of natural calamities, manmade disasters, etc. There are three types of policies under this category:

• Own-damage policy - It provides financial compensation for damage to your bike.

• Comprehensive policy – This policy consists of features of both third-party and own damage policy.

• Add-on policy- If the comprehensive policy does not provide adequate cover according to your needs, you can opt for additional covers or add-on policies. You need to pay extra premium for these covers.

Second party bike insurance

There is no specific insurance policy under this category. It is basically the bike insurance issued by the second party or insurance company.

Third party bike insurance

Third party bike insurance is also known as a third-party liability policy. Suppose you are the bike owner, then this is a mandatory policy for you according to law. Here, you are the first party, the insurer or the insurance company is the second party, and any other individual on the road is the third party. If an accident takes place in which your insured bike causes loss to a third-party, you can raise a claim. Once your insurer approves the claim, you get up to a certain amount as fixed by the IRDAI (Insurance Regulatory and Development Authority of India).

• The claim amount compensates for any damage to the property, vehicle or injury to the third-party.

• There can be situations when the accident is severe and the third-party suffers from permanent disability or loss of life. Your insurer is liable to pay the entire sum insured to the nominee of the third-party then.

• Your insurer will take care of legal matters as well, if an accident leads to complicated court proceedings against you.

First party vs Third party

Differences between the two parties are mentioned in the following table:

First Party	Third Party
You are the first party if the bike is registered and insured in your name. Basically, you are the bike owner.	Any individual other than yourself or your insurer.
You raise a claim with your insurer in case there is an accident with a third-party in which your bike causes them a loss.	The third-party would demand compensation from you if there is damage done to his property, vehicle or physical injury due to the accident.
You can raise a claim for your bike in case there is damage due to non-accidental reasons like flood, riot, dents, breakage, etc.	The third-party will not get any compensation unless he can prove that his loss is due to an accident with your bike and not due to other reasons.
There is no monetary transfer to you from your insurer, once the claim gets approved, in case you cause any damage to a third-party. Monetary transfer only happens to you if you file a reimbursement claim against any damage done to your own bike.	Your insurer directly transfers the compensatory amount to the third-party.

While buying bike insurance, you will come across several unfamiliar terms in the policy document. The terms - first party, second party and third party bike insurance occur frequently and are associated with various types of plans that an insurer offers. A clear understanding of these wordings can help you understand the differences among them and the financial coverage that they provide.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

Source:https://www.irdai.gov.in/

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