What’s the most critical component you need to go for a satisfying bike ride? A helmet, petrol or bike? It’s actually the insurance policy that softens the blow of an accident or an unforeseen event.
Most of us, while growing up, saw insurance as a maneuver for two essential purposes – tax deductions and savings. In Indian households, it has been the norm to consider insurance policies as a form of savings. That said, when it comes to bike insurance, it is more important than you might have thought.
The moment you buy a two-wheeler, you should get a two-wheeler insurance policy. It doesn’t matter whether the bike or scooter is new or old; the insurance policy is there to protect you, your loved ones, and even the people on the road. The tax deductions and potential savings are aftereffects. The primary purpose of the insurance policy is to safeguard the people and assets covered under it.
You generally get to have two options in the bike insurance space – Comprehensive Insurance and Third-Party Insurance. If you think what the difference between comprehensive and third-party two-wheeler insurance is, read along to find out:
Much like its name suggests, Comprehensive Bike Insurance gives you end-to-end coverage. If you have never bought automobile insurance up until now, comprehensive bike insurance may seem like a little out of your needs. But if you dig a little deeper, you will start seeing the need for it.
To understand comprehensive bike insurance, you will have to understand third-party bike insurance. Third-party insurance covers the ‘third-party’ in the case of an accident. This way, if you get into an accident, you will not be liable to pay for the loss or damage to another person’s health or assets. Do you find something missing? If you do, you are not alone. Third-Party insurance, by design, covers only the third party damage that you have incurred. But, when you are coming out of an accident, your primary plan would be to ensure your safety and to get your bike back to its reasonable condition. Third-Party insurance will not cover any of those latter expenses.
Comprehensive bike insurance is good because it helps people get total coverage of their bikes. Instead of thinking about insurance as a financial safeguard when you meet with an accident, you should look at it as a permanent safeguard for your bike. Comprehensive bike insurance will help you take care of the costs you might have to incur if your bike gets into an accident, if it gets stolen, if it gets damaged due to riots/malicious intents, or even if it gets damaged due to a natural calamity.
So, the ‘comprehensive’ in the comprehensive bike insurance stands for all the situations where your bike might be in danger.
Comprehensive bike insurance has some clear benefits:
Just because you are buying a comprehensive policy does not mean you will have to incur third-party damages. Comprehensive policies give the benefit of third-party insurance and much more.
Most insurance policies will not give coverage from natural calamities like floods, fires, and earthquakes. Even if you don’t live in a zone that is likely to get affected by this, you can never accurately predict when will a natural calamity hit. Hence, a comprehensive policy will save you even from the dangers you cannot perceive.
Much like a natural calamity, it is tough to forecast an even of this type. Take, for instance – your bike gets damaged because someone scratched its expensive custom paint. Or, your bike got caught up in a terrorist attack. Or, your bike got burnt during mob unrest. These are situations way out of your control. Even if you take great care of your bike, it may end up in any of these situations. With a comprehensive policy in place, you will get coverage from such instances as well.
Most leading insurers also provide add-ons to the comprehensive policy. The standard forms of add-ons offered are Personal Accident Cover, Zero Depreciation Cover, Return to Invoice and Pillion Rider. The personal cover will include any physical damages that you have experienced. Zero depreciation will help you get the reimbursement that considers the value of your bike, without the straight-line depreciation. Return to Invoice will reimburse the entire invoice amount for your bike. And Pillion Rider will cover anyone who is accompanying you on the bike.
Despite its benefits, there are some limitations to the comprehensive bike insurance policies:
The coverage is greater in comprehensive insurance. Hence, the premiums will be relatively higher. Sure, the value is far greater than what you are paying, but comprehensive bike insurance is relatively expensive. By design, since it offers greater coverage than third-party insurance, comprehensive is always costlier.
While this is entirely debatable, if your vehicle is not that expensive, you might have to do a cost-benefit analysis. You have to see whether the salvage value of your vehicle is worth spending more on ensuring it. If you are buying a second-hand, inexpensive vehicle – and the vehicle’s value is too low, it might not be advisable to buy a comprehensive policy.
The best coverage is available only in instances where you buy the comprehensive cover along with the add-ons. The general disadvantages of insurance policy like depreciation, wear & tear issues, and so on, will still be pertinent if you don’t buy comprehensive coverage with all the add-ons.
Ideally, you should buy insurance primarily for your safety, then for the savings and then for the mandatory nature of the policy. But, if your only criterion is to stay within the permits of the law, you might consider avoiding the high premium of the comprehensive coverage.
Your comprehensive bike insurance will not cover the damages in the following cases:
Imagine – you get into an accident that is not because of your fault. Fortunately, you and your bike are safe, and no one was sitting on your rear seat. But, during the accident, you banged into a bicycle driver who is now facing multiple fractures and a totally useless expensive electric bike. Plus, when you slipped, your bike damaged the fences of private property. If you take the physiological damages incurred by the other party, the other party’s bicycle, and the damage to private property, you will find yourself in deep financial trouble.
Now, no matter how safely you drive your bike or scooter, there is a probabilistic chance of your involvement in an accident. Even if you are not at direct fault, you will end up at the paying end of the liability. And, if there is a domino effect that results in several classes of damages to several parties, you might face severe financial hardship in paying it all off. You may think about fighting the case. But the Motor Vehicle Act 1988 will hold you accountable to pay all of that damage.
The good part is that the same act also mandates you to own third-party insurance. This form of insurance will cover the damages incurred by ‘third parties,’ i.e., people and assets other than you, your co-passenger, and your vehicle. The day you own a two-wheeler on your name, it becomes your duty to hold third-party bike insurance.
Here are some clear benefits of third-party bike insurance:
Since people’s lives and assets are involved in such accidents, the highest limit of damage is still quite a big number by all means. Hence, by getting basic third-party insurance, you are able to safeguard yourself from any such liabilities. No matter how big the scale of the accident is, if your case fits into the conventional criteria, you will easily be able to pay off the damages with your insurer’s reimbursement.
Insurance Regulatory and Development Authority (IRDA), the administrative body of the insurance industry, regulates the premiums payable on third-party insurance. Hence, you will never be dealing with high premiums for the insurance, since it is mandated and capped by law.
Most third-party insurance policies include only a minor add-on that covers personal damages incurred in the accident. Hence, you wouldn’t be paying for a considerable amount of add-ons.
Believe it or not, even though the coverage is minimal with the third-party insurance, you can buy one very quickly. Most insurance companies understand the fact that third-party insurance is mandatory, and hence more customers will need it. This is the reason why, with a leading insurer, you will find it easy to get third-party insurance.
Even though it may seem like a simple and inexpensive solution, third-party insurance has quite a few drawbacks:
It is impossible to cover natural calamities, vandalism, civic unrest, or even theft under your third-party insurance coverage. It only covers the damages you would be liable to pay to someone else. All the damages that you personally incur will still cling on to you.
Most third-party insurance products don’t offer zero dep coverage or return to invoice add-on. Hence, your bike or scooter will get depreciated every year. After a few years, even if you possess and add on that allows you to claim personal damage, you will only get a small amount in line with the depreciated value of your bike or scooter.
If you are a bike riding enthusiast, there is no way that a third-party coverage will be enough for your vehicle. Any bike or scooter that is new or is more expensive than its average alternatives will need more comprehensive coverage. Having a relatively expensive bike or scooter and having a third-party insurance cover don’t go hand in hand. You will end up paying a lot for your vehicle’s damage.
|Coverage:||Comprehensive coverage for accidents, calamities and other unfortunate events.||Only to third-party damages in accidents.|
|Add-Ons:||Personal Damage, Zero Dep, Return to Invoice, Pillion Cover, etc.||Personal Damage|
|Ideal For:||Everyone||It’s still mandatory.|
|Does It Cover the Other One?||Yes. By getting comprehensive insurance, you automatically get third-party coverage.||No. It does not cover any benefits offered by Comprehensive Coverage policies.|
Comprehensive two-wheeler insurance is a wide covering protection policy that protects from damages incurred by calamities, accidents, and vandalism. Third-Party insurance provides financial cover for damages incurred to other people and property by the policyholder. Considering the difference between comprehensive and third-party insurance, the former covers injuries, loss to passengers, vehicle, and property damage. Choosing a flexible insurance policy that covers more potential damage scenarios is always recommended over others.
Yes, third-party insurance is made mandatory by the law for safety and punishment-led rule-following. It provides personal and third party damage reimbursement while being inexpensive in comparison to comprehensive insurance. Third-party insurance will make reimbursements and compensation easier from your end. This policy is suitable if you have a second-hand or inexpensive vehicle. As an aware customer, consider the limitations and benefits that you may receive before choosing third-party insurance.
Absolutely! You can convert the third party insurance to comprehensive to rope in additional benefits. Contact your agency, discuss the required paperwork and new premium to get started. Moreover, the policies are flexible, allowing you to choose services and add-ons to the policy. The switch to the comprehensive insurance will increase the premium depending upon the cover. But on the brighter side, you will get more damage cover for your vehicle.
With unprecedented situations, it is wise to have insurance to protect your life and others. An insurance policy makes handling such circumstances easier and cushions the blow to your pocket. You get the maximum cover from all the possible damages that can incur with insurance. Depending upon your insurance choice, you can get fully bulletproof for your damages and third-party damages.
There are two choices, comprehensive and third party insurance. You may want to consider all the pros and cons, depending upon the situation. The significant difference between comprehensive and third-party insurance is the coverage of benefits you acquire. Comprehensive insurance provides an end-to-end cover, while a third party is limited to the assets of others. However, this comes at a premium price since you get what you pay for.