Own Damage Policy V/S Third Party Only Policy Under Bike Insurance

A bike is not just a means of transportation; it plays a vital role in helping us meet our day-to-day needs. Whether it’s commuting to work, running errands, or enjoying leisurely rides, a bike is always a reliable companion. Thus, it is important to protect it against potential risks and unforeseen incidents. And to do that, having the right insurance coverage in place becomes essential.

In the realm of bike insurance, two primary types of coverage come into play: own damage and third-party cover. In the event of an accident, if your bike sustains damage or causes damage to other vehicles involved, an important question will arise - which policy type will help you?

In this article, we will delve into the differences between own damage and third-party policy to help you make an informed decision on the most suitable protection for your bike.

First, What Is A Standalone Own Damage Bike Insurance?

A standalone own damage policy is designed to provide coverage for damages to your own bike. It provides you with financial protection against road accidents, fires, natural calamities, and even man-made disasters.

What Is Included In A Standalone Own-Damage Policy?

The insurance company provides coverage under a standalone own-damage policy for various damages that may occur to your bike, including -

1. Accidents
   The policy provides coverage for damages caused to the bike resulting from accidents.
    
2. Fire
   The insurance company offers coverage for damages to the bike caused by fire, explosions, self-ignition, or lightning. For example, Lisa is a bike owner who resides in a suburban area prone to thunderstorms. One stormy night, lightning struck a tree near her parked bike, causing it to catch fire. Fortunately, Lisa had own damage insurance policy, so the insurer covered her bike’s repair expenses.
    
3. Theft
   The insurance company also provides coverage if your bike is stolen. For example, Lokesh had parked his bike in his building’s basement. It got stolen from there in the middle of the night. In such a situation, the insurer will cover the replacement costs of the bike. 
    
4. Man-made Disasters
   A standalone own-damage policy offers coverage for damages to your bike resulting from man-made disasters such as riots, strikes, malicious acts,  terrorist activities, etc. For instance, David lives in a bustling city known for occasional political protests and unrest. He owns a scooter which he parks on the roadside. One day, during a protest that turned violent, David's scooter was vandalised and damaged by rioters. He owns a standalone own-damage policy, so his insurer will cover the damages caused to his scooter.
    
5. Natural Calamities
   The policy also provides coverage for damages to your bike caused by natural calamities, including earthquakes, floods, typhoons, hurricanes, storms, tempests, inundation, cyclones, hailstorms, frost, and other similar events.
6. Add-ons
   Add-ons are optional benefits you can add to your base policy at a certain extra cost to enhance its coverage. Some of the add-ons available under a standalone own-damage policy include -

• Zero-depreciation Cover
• Roadside Assistance Cover
• Return to Invoice Cover
• Consumable Cover
• Personal Accident Cover
• Driver Cover

For instance, Amy has a two-wheeler that got damaged in an accident. Since she has a zero-depreciation cover, her insurer covered the repair costs without deducting any depreciation.

What Is Not Included In A Standalone Own-Damage Policy?

A standalone own-damage policy excludes coverage for the following -

1.  Third-Party Damages
   The policy does not provide coverage for any damages caused to a third party or their property. For instance, Mira was riding her bike on a busy street and she accidentally collided with another vehicle. This caused significant damage to the other rider’s scooter. In such a situation, a standalone own damage policy will not cover the expenses for the other rider’s vehicle, and Mira will have to meet those expenses herself.
    
2. Drunken Driving
   A standalone own-damage policy does not provide coverage for damages caused by drunken driving.
    
3. Driving Without A Valid Licence
   If you choose to drive a vehicle without a valid driving licence and cause an accident, an own damage insurance policy will not cover the damages caused.
    
4. Any Consequential Damages
   The own damage insurance policy excludes consequential damages, meaning, any indirect or secondary damage resulting from an unfortunate event will not be covered.
    
5. Damages caused Due To Electrical Or Mechanical Fault
   If inherent mechanical or electrical issues, such as electrical system malfunction, etc, cause damage to your vehicle,  a standalone own damage policy will not cover the cost of repairs or replacements.
    
6. Geographical Limits
   If your bike sustains damages while running outside the geographical boundary specified in your policy, the insurer will not provide coverage for the repairs or replacements required.
    
7. Claims Arising Out Of Contractual Liability
   Any claims that arise out of a contractual agreement or obligation will not be honoured by the policy.
    
8. War Or Nuclear Weapons
   If your bike is damaged due to acts of war, conflicts, hostilities, or nuclear events, an own damage insurance policy will not provide coverage for the associated expenses.

Now, What Is A Third-Party Only Policy?

As per the Motor Vehicles Act of 1988, it is mandatory to have a third-party policy for your two-wheeler. Third-party insurance only offers protection against damages caused to the third party and their property. Under this policy, there is no coverage for damages caused to your own vehicle.

What Is Included In A Third-Party Only Policy?

Here’s what is covered by a third-party only policy -

1. Injury Or Death Of The Third Party
   A third-party only policy covers financial losses arising out of a third-party's death or permanent disability in the event of an accident. Example: Prakash, while riding his scooter, accidentally collides with a pedestrian crossing the road. The pedestrian suffers severe injuries, leaving them permanently disabled. Fortunately, Prakash had a third-party only policy, so his insurer will cover the medical expenses of the third-party.
    
2. Property Damage
   A third-party only policy offers protection against damages caused to the property of third parties. This includes vehicles, shops, boundary walls, and other belongings.

What Is Not Covered Under A Third-Party Only Policy?

Third-party only policy excludes coverage for the following -

1. Own Damage
   If your bike sustains damage as a result of an accident or natural calamity, the policy will not provide coverage for the cost of repairs or replacement. For instance, Veer’s bike gets damaged in the event of an earthquake. He owns a third party policy, which does not provide coverage for the cost of repairs or replacement of his own bike. So, he has to bear the expenses of repairing his bike out of his own pocket.
    
2. Personal Injury
   If you sustain injuries in an accident, the policy will not cover the medical expenses or other related costs associated with your treatment. In order to safeguard yourself against expenses related to medical treatment, loss of income resulting from disability or death, you will have to opt for additional coverage, such as personal accident insurance.
    
3. Damages Caused To Third Party Outside Geographical Limits
   The policy does not provide coverage for any damages caused to third parties or their property outside the specified geographical limits.
    
4. Damages Caused Due To Negligence
   Any damages resulting from your negligent actions that caused the accident will not be covered by a third-party only policy.
    
5. Damages Caused Due To Intoxication
   Damage caused while driving under the influence of alcohol will not be covered under a third-party only policy.
    
6. Damages Caused On Purpose
   If you deliberately damage any third-party property or cause harm to a third party with the intention of making an insurance claim, the insurer will not cover your expenses.

Comparison Of Standalone Third Party And Standalone Own Damage Policies

Here are the key points of difference between these policies -

Conclusion

Both standalone own damage insurance policy and third party only policy offer different types of protection in different situations. A standalone own damage policy covers damages caused to your own bike, while a third party only policy covers the damages caused to a third party or property by your bike. Therefore, it is important for you to understand their differences and make a well-informed decision - so that you and your two-wheeler are protected against all odds.