Most two-wheeler owners in India buy insurance for their vehicles just for the sake of it, without understanding the real benefits and purpose of different kinds of insurance policies. This may leave them vulnerable to financial losses in case of any mishap if their vehicles are not sufficiently covered. It may also lead to unnecessary expenditure on plans and policies that may not best suit their two-wheelers. So, before you plan to buy or renew your two-wheeler insurance, take a look at the two main types of policies – third-party and comprehensive -- and how they differ in terms of the benefits they offer.

Comprehensive vs third-party bike insurance

The third-party insurance is mandatory for all two-wheelers plying on Indian roads, according to the terms of the Motor Vehicles Act, 1988. As the name suggests, it protects you against any third-party liabilities in case of an accident involving your bike.This means it would cover only the loss or damage suffered by a third party.

For instance, if your bike hits another bike on the road and damages some of its parts, your third-part liability cover will help you compensate the owner of the other vehicle to the extent of damages suffered by him/her. Notably, the third-party policy would not cover any loss/damage to your own vehicle. You would have to pay the repair expenses for your bike from your own pocket.

This is where a comprehensive insurance policy comes into the picture. This type of insurance offers protection against damages or losses suffered by both the third-party as well as your own insured vehicle in case of any mishap. The premium you pay for this type of policy has two components – one goes towards the third-party cover and the other is for the own-damage (OD) cover. So, taking the above example again, if you buy a comprehensive insurance policy, it would not just compensate the third party, but would also take care of the repair bill of your bike.

Difference between comprehensive and third-party bike insurance

When we talk of comprehensive vs third-party bike insurance, the prime difference is the extent of coverage. But there are other points of variation as well. Let's take a look at each of them in detail:

1)Coverage

The third-party bike insurance policy offers limited coverage and protects the policyholder only against damage/loss towards the third party (injuries, death, property damage, total or partial disability etc.) in case of a mishap. In comparison, a comprehensive bike insurance policy offers much wider coverage. Apart from protecting against third-party liabilities, it also covers your own vehicle against risks such as theft, burglary, damage due to accident, fire, natural calamities, etc.

2)Add-ons

Third-party insurance is the most basic form of insurance. There is no option to buy add-on covers, also known as riders, to widen your protection net. Whereas a comprehensive policy gives you the option to opt for various kinds of additional covers by paying a little extra premium. These add-ons may include personal accident cover, zero depreciation cover, insurance for engine and accessories, roadside assistance cover and so on. This helps you in customising your insurance policy as per your exact needs and enjoying full peace of mind.

3)Premium

Third-party bike insurance is cheaper than comprehensive bike insurance in terms of premium as the extent of coverage and benefits offered by the latter are much higher. For third-party bike insurance policy, the premium is decided by the Insurance Regulatory Development Authority of India (IRDAI) based on the bike's engine cubic capacity. The rates are standard across insurers. However, in case of a comprehensive policy, though the third-party component premium is standard, the own damage component premium is set by the insurer depending on the market value of your bike, engine capacity, age of the bike, etc. Therefore, the premium amount for a comprehensive policy varies from insurer to insurer.

4)Legality

The third-party two-wheeler insurance is mandatory in India, as per the provisions of the Motor Vehicles Act, 1988. There is no way you can avoid it. If you are found driving your bike without third-party insurance, you will have to pay penalties for not complying with the law.On the other hand, buying a comprehensive policy is not compulsory by law. It is optional. Though it is recommended that bike owners buy comprehensive policies for the all-round protection of bikes, not buying this type of insurance will not attract any penalty.

5)Suitability

While there are no hard and fast rules to judge suitability of a policy, it is generally perceived that if your bike is comparatively new and high maintenance or is used very frequently, you better opt for comprehensive bike insurance for protection against all forms of risks.But if your bike is old or is not used that frequently, you need not pay huge amount as premiums for a comprehensive policy. Rather just opt for third-party coverage (which is also compulsory by law) and handle the expenses of your bike from your own pocket. This may turn out to be cheaper than buying a comprehensive plan itself for bike that has crossed a certain age.