Third Party Car Insurance

Third-party car insurance provides coverage in the event of damage or loss to a third-party vehicle, individual, or property. It covers only damages to the third party and does not provide any coverage to the policyholder. 

In India, the Motor Vehicles Act mandates Third-Party Car Insurance. Not purchasing third-party insurance can have significant consequences (fine or imprisonment). Furthermore, it safeguards your finances against potential losses resulting from your vehicle causing damage to another person's vehicle, an individual, or their property. For example, if you accidentally harm another car’s wing mirror, your third-party car insurance will compensate for the losses incurred by the affected third party.

What are the Inclusions Under Third-Party Car Insurance?

Given below are the things that are covered under Third Party Insurance:

  • Third-Party Property Damage: 

In case someone damages a third person’s property, then the insurance policy will cover the repairing cost for the damages caused. There is an upper limit to the liability amount that the insurance provider will cover.

  • Personal Damage to Third Party: 

In case a third-party person incurs injuries due to the policyholder's mistake, the insurance provider will cover the medical costs. The insurer will cover all the expenses and losses that will arise. In an unfortunate situation where the third-party individual incurs death, the insurance company will pay compensation to the family of that individual.

  • Personal Accident Cover: 

This is an optional cover that can be included in the third-party car insurance. This cover provides protection in case the vehicle driver incurs serious injuries or worse, dies in the accident. In case of death, the compensation is paid to the nominee of the policyholder.

What are the exclusions in Third-Party Car Insurance?

Some situations that are not covered by third-party insurance are:

  • Own Damages: No coverage is provided for any injuries or damages to the policyholder or his/her vehicle, be it accidental damages or damages due to fire, natural calamities, wars, etc. 
  • Driving under the influence of drugs/alcohol: In case there is damage to a third party but the driver of the insured vehicle was under the influence of drugs, the insurance company shall provide no coverage. 
  • Invalid Driving License: If the license of the person driving the insured vehicle is invalid, no insurance will be provided.
  • Outside Geographical Limit: If the accident or damage to the third party happened outside the geographical boundaries specified in the insurance policy, then no coverage will be provided. 
  • Undesignated Driver: If any individual other than the owner of the insured car or the designated driver was driving the vehicle, no coverage will be provided for any third-party liabilities. 
  • Unauthorised Usage: If the insured car is being used for illegal activities and there are third-party liabilities, the insurance company will provide no coverage. 

Please note that these are some of the most common exceptions, and in order to get a detailed list of exceptions from your insurer, please refer to the policy wordings.

Difference Between Third Party and Comprehensive Insurance

Comprehensive Vs. Third-Party Insurance

Parameters

Third Party Insurance

Comprehensive Insurance

Coverage

It covers injuries or damages to only the third party.

Injuries/damages are covered for both the third party and the policyholder. 

Mandatory

It is mandated by law.

It is not mandated by law but highly recommended to buy for personal safety and peace of mind. 

Cost

It is comparatively cheaper. 

Costlier

Add-ons

It does not have the option of add-ons.

Numerous add-ons are available to personalise the insurance policy according to the needs and preferences of the policyholder. 

Advantages of Third Party Insurance

Here are the key benefits of having a third party car insurance:

  • Safeguards Against Unforeseen Expenses:

With the constant hustle and bustle of life, it might happen that due to your own mistake, you damage someone’s vehicle or there is some serious injury. With third party insurance, you do not have to worry about any financial losses in such situations as your insurance provider will cover all your expenses. 

  • Ensures Legal Compliance:

In accordance with the Motor Vehicles Act, all vehicle owners are required to possess at least third-party car insurance. For enhanced protection of your own vehicle, you have the option to opt for a Comprehensive Car Insurance Policy, which encompasses coverage for third-party liabilities as well as safeguards for your own car.

  • Provides Protection in case of Physical Injuries:

If you don't already possess a personal accident cover from another policy, like your health insurance, a third-party car insurance policy allows you to acquire one. This additional coverage safeguards you in the event of an accident, ensuring your own protection as well.

  • Peace of Mind:

Third-party insurance ensures you can drive your vehicle on the road with peace of mind, knowing that any significant financial losses that might arise are covered. The insurance company will handle all your expenses, allowing you to drive your car confidently and without worry.

How to Claim Third Party Insurance?

  • The first step is that an FIR has to be filed by the respective third party individual against the owner of the vehicle for compensation.
  • After the FIR has been filed, both the parties have to approach the Motor Accidents Claims Tribunal and register the case with them. 
  • Once the case is heard, the court will decide the compensation amount. The amount is not pre-decided. However, the IRDAI says that the coverage amount should not exceed 7.5 lacs.

Third Party Insurance Premium Rates

As directed by the IRDAI, all car owners are expected to pay premiums for their third party insurance according to the following parameters:

Engine Capacity

Premium Rate (Effective 1st June 2022)

<=1000 cc

Rs. 2094

>1000 cc & <=1500 cc

Rs. 3416

>1500 cc 

Rs. 7897

Wrapping Up!

Third-party insurance is the bare minimum that a vehicle owner must purchase to drive safely on the road. It is mandated by the law and, hence, extremely important to save yourself from fines. One can easily buy the policy online through a hassle-free process. All you have to do is have the necessary documents and identification proofs.

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