A road accident is like a bolt of lightning that appears out of the blue and can change your life in a matter of seconds. No matter how closely you follow the rules and keep your surroundings in mind, you may still become a victim. So, it's important to be prepared for the worst. And that's where bike insurance comes in. As per Indian motor laws, you must at least have third-party bike insurance - if you want to ride on the road. If you drive without it, not only are you at risk of incurring legal penalties, but you're also jeopardising your financial safety.
A third-party insurance policy protects you against any financial losses resulting from causing any bodily injury or death or property damage to a third party in the event of an accident. It covers damages or injuries caused to other vehicles, pedestrians, or any other third-party element by your vehicle. In exchange for this coverage, you need to pay the stipulated premium to the insurer. It is set according to the cubic capacity (cc) of the bike engine and is regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
In this article, we'll learn about third-party insurance for bikes in detail.
What Does Third-Party Insurance Cover?
Here are the types of damages covered by third-party insurance -
1️⃣ Bodily Injury Or Death
In case you meet with an accident that results in bodily injury or death of a third party, the policy will cover your legal responsibility to compensate them. The compensation amount is decided by the court and is paid to the injured party or the legal heirs of the deceased.
For instance, Mahesh was driving when he accidentally hit a person walking on the side of the road. The collision was so severe that the victim suffered severe injury leaving him permanently disabled. Mahesh has third-party insurance, so his insurer will compensate the third party based on the amount determined by the court.
2️⃣ Property Damage
In the event that you cause damage to a third party's property, such as other vehicles, buildings, or other structures, because of your vehicle - the policy will cover your legal liability to bear the compensation of the same.
Here’s how the property damage is covered by the third-party policy -
Scenario 1: Ravi was reversing his bike when he hit a flower shop. And, the damage expenses came to around Rs 20,000. Since he owns a third-party policy, his insurer will cover the expenses.
Scenario 2: Rohan was on a road trip on his bike when he crashed into another car on the road. The other vehicle sustained severe damage. Since Rohan has third-party insurance, costs associated with repairing the other person's vehicle will be borne by the insurer.
And so on.
What Is Not Covered By Third-Party Insurance?
Here are some circumstances in which third-party insurance will never provide coverage -
1️⃣ Own damage
In the event that your bike is damaged in an accident or natural calamity, your policy will not cover the costs associated with repairing or replacing it. It may be necessary to purchase additional coverage, such as own damage or comprehensive insurance, to cover the cost of bike repairs or replacements in these cases.
For instance, Banu is on her way to work. Unfortunately, she meets with an accident that results in severe damage to her bike. However, her insurer won’t pay for repairing the bike since Banu owns only third-party insurance. So, she will have to bear the expenses herself.
Damages caused due to your negligence will not be covered.
3️⃣ Personal Injury
The policy does not cover medical expenses or other costs associated with treating injuries you sustain in an accident. In that case, you need to opt for additional coverage, such as personal accident insurance, that protects you against medical costs and loss of income arising out of disability or death.
For instance, Rachel was driving on the road when she lost control of her bike and hit the divider. She suffered a severe leg injury, which resulted in a partial disability. However, she only has third-party insurance, so the insurer will not cover her medical expenses. So, she will have to pay the medical bill herself.
4️⃣ Outside Geographical Limits
Damages caused to third parties or their property outside the geographical limits specified in the insurance policy document are not covered.
Damages caused while driving under the influence of alcohol, drugs etc. are excluded from coverage.
For instance, Ben was riding his bike under the influence of alcohol when he ran into a store, causing quite some damage to it. In this case, the insurance company will not cover any damage expenses due to the fact that Ben was drunk when he was driving.
6️⃣ Intentional Act
The insurer will not cover your expenses if you intentionally cause damage to a third party's property or injure a third party on purpose.
We’ve reached the end. Besides being a legal requirement, third-party insurance protects you from unforeseen expenses incurred due to third-party liability in the event of an accident. Before you invest in it, make sure you understand its inclusions and exclusions - so you know what you're signing up for.