First Party Bike Insurance refers to the insurance cover provision for the damage to the bikes that the riders/policyholders cause themselves. The first person in an insurance policy is the policyholder or the insured. First Party bike insurance is basically the ‘Own Damage Policy’ that is restricted to the damage done by the insurers themselves. It covers the costs of the insured’s property and person in bike insurance.
First Party Bike Insurance – Definition
The term ‘first party’, in general, refers to the main customers or clients. In an insurance cover policy, the first person is the customer who buys the policy. The ‘insured’ becomes the first party whereas the ‘insurer’ is the second party. First party bike insurance refers to the insurance covering monetary loss related to damage caused by the policyholder. It provides coverage for the insured bike and the insured person in case of personal accidents. This policy also covers accidents like fire, theft, etc. where the first party suffers a partial or complete loss. Providing cover for bodily injuries or death is mandatory in first party bike insurance. If the insurance providers deny the cover for the insurance buyer, they can be penalized.
Difference Between First Party Bike Insurance & Third Party Insurance
One of the most common queries related to vehicle insurance is the difference between a first party bike insurance and third-party insurance. First and foremost, any person other than the insured and the insurer is a third person/party. So, when there’s damage to & claim by the third party, it is a third party claim. The motor insurance policy that provides this cover is called third-party insurance.
As the policy name suggests, the fundamental difference between the two types of policies lies in the nature of the claim as well as the claimants. The first party bike insurance policy is coverage for the policyholder and the damage/loss due to him. Third-party bike insurance cover is for the financial loss to third parties on the road. Some of the key differences to keep in mind between the two types of coverage policies are:
1. Type of Coverage
First party policies cover the first persons/policyholders and damage caused by themselves. It is mainly the ‘Own Damage Policy’. Third-party insurance policies are for the damage caused by third persons. It is for parties other than the ones in the policy agreement that is the insured and the insurer.
2. Law Compliance
Most importantly, third party motor insurance is mandatory by law. Under the Motor Vehicles Act,1988, having at least a third party insurance is a necessity. First party bike insurance is not in compliance with the law. It is an additional cover that one can take.
3. Claimants of Insurance
The claimants for the first party and that of the third party differ. In the former, the owners or the policy buyers are the claimants. But when you cause damage to the third person, then they are the claimants. Similarly, if third parties cause damage to you, then you can claim to their insurers.
4. Natural or Man-made Disasters
First-party coverage includes theft, damage due to external forces like fire, flooding, vandalism, etc. Third-party insurance does not protect against such natural or man-made factors. It is only for accidents or collisions done by/to third parties plying on the road and has limited coverage.
Many additional coverages can serve as an add-on to the first party which does not apply to third party bike insurance covers. For example, zero depreciation policy, consumable insurance, road assistance cover, etc. This further limits the third party coverage whereas one can expand and customize the first party bike insurance policy.
6. Claim Acceptance by Insurer
It is obligatory for the insurer to provide the claim money as per policy terms in first party bike insurance. However, in third party claims, there is no such obligation. In any case, whether a first party or a third party claim, the insurer investigates it. It estimates the cost before disbursing the insurance claim money. The insurer may also reject the claim if it is found to be untrue, staged, having reasons that are excluded, or any such equivalent condition. But it is true, it promptly acts in case of first-party claims.
However, it may choose to contest the claims by a third party. In a first-party bike insurance policy, if the insurance provider denies paying, it is a breach of contract. The policyholder may complain or knock on the doors of the court. In a third-party liability case, the third person may not be able to legally sue the insurer.
7. Dispute Settlement
Motor Accidents Claim Tribunal (MACT) Court settles the disputes and claims of the third party claim. Whereas, it is the insurance company that settles the first party bike insurance claims.
Above mentioned points are the primary difference between the two. Most of the policyholders go for third party liability because it is law-mandated and has low premiums. However, one must have first-party bike insurance that protects you against accidents and certain natural and man-made forces. A Comprehensive Policy safeguards against both the causes of damage and loss. It is comprehensive of first and third-person. Third-party damage and thereby has higher premiums than both. However, it provides complete protection and also complies with the law as it includes third-party liability.
Like all insurance policies, any two-wheeler policy, be it third-party or first-party, they have certain exclusions. They are as below:
- A person can not claim insurance money (or claim own damage) if s/he was under influence of alcohol, drugs, or any such prohibited substance
- These claims do not apply to minors or those who do not have a driving license. Also, those who have expired driving licenses need to renew them, or else it stands invalid for policy claim
- No insurance policy covers normal wear and tear of the vehicle. Also, it will not provide for low or zero maintenance
- Although some natural/man-made destructions are covered (as mentioned earlier), not uncontrollable factors are taken into consideration. For instance, war-zoned countries or under nuclear attack, earthquakes, hurricanes, etc.
- Also if the personal vehicle is used for commercial purposes, the insurer may reject the claim
Note: Some comprehensive policies do provide for some natural calamities. There can be an add-on policy as well. Always read the terms and conditions of the policy and confirm with the provider.
Benefits of First Party Bike Insurance
There are several advantages of a first party bike insurance policy which reiterates some of the facts mentioned above. The benefits of first-party bike insurance are:
- It protects you from the financial burden that you may incur for self-inflicted damage. It covers if you collide with persons or stationary objects, meet with an accident, or cause similar incidents
- This insurance policy covers not only the bike or the two-wheeler vehicle but also the policy owner. It is coverage for both property damage and personal accident. It safeguards from injuries to the body, disability as well as death. In the case of death of the policyholder, the insurance providers are to pay the family
- Third-party insurance is mandatory and adding first party bike insurance protects from own damage as well as third party liabilities. Having one marks you fully safe. A comprehensive policy is recommendable as it is inclusive of the two
- Reminding the fact that the first party insurance includes additional covers. It can have add-ons like engine protection, outstation covers, key replacement, and so on. Having only the mandatory third-party liability cover provides deprives of add-on cover facilities
- NCB (No Claim Bonus) is not offered on third party cover but a first party bike insurance policy. It applies to a comprehensive policy that includes the first party. No Claim Bonus is the discount on the premium of the policy when you buy it. It is given only on renewal policies upon the condition that no previous insurance claims were made
- Insurance providers are more prompt in an investigation of the damage or loss and evaluation of its costs. They pay the insurance as per the claim and the terms of the agreement
Filing a Lawsuit Against the Insurer in First Party Bike Insurance
The policyholders can file a lawsuit against the insurer if they are acting in bad faith. These conditions are:
- When the insurers go passive or show no promptness, the insured can sue them if they do not reply or acknowledge your claim
- If there is delay or denial by insurance providers without any justifiable reason. When your claims are refuted wrongly, the insured person can take action against them
- The insured can complain if there is no proper investigation of the damage-causing incident and the insurer fails to comply with the policy terms
- When cost estimation is wrong or not as per the insurance agreement terms. The insured can take legal action for an underpaid insurance claim without justified reason
- If there is too tedious a process of documentation that delays, underpays, or rejects the claim for minute details. Some unfaithful insurers may attempt to keep the former muddled up in unnecessary documents
- The policyholder can file a lawsuit against the insurer if the latter has any wrong intention to intimate the insured or harass them as they make the claim
Wrapping it up:
Having an insurance policy mitigates the burdensome financial cost when dealing with the complete loss or damage repair of the vehicle. It reduces the risk through risk-sharing by pooling in the risks and the premiums of all policyholders. All two-wheeler owners go for third party insurance because it is mandatory. However, they often skip first-party insurance because it is not mandatory, and having this policy increments the premium payments. However, a slight premium can provide better coverage and protect you from more risks. Thereby, it is always advisable to get a first party bike insurance policy in addition to a third party liability. As said earlier, better to buy a comprehensive plan that contains both types of cover.
- No, you can not claim first party bike insurance for no-fault of yours on the road. It may apply to theft or vandalism but not accidents or collisions that are done by other drivers. It is when you cause an accident or a party to it.
- You can claim third party bike insurance if the damage is caused by someone else and no fault of yours.