Third Party Insurance

Third party car insurance helps you pay for any third party related liabilities resulting from an accident involving your car. It offers monetary compensation in case of injuries, property damages, or even loss of life to others.

What is Third Party Car Insurance?

Third party insurance, also known as liability-only policy, is mandatory under Indian Motor Vehicles Act 1988. Driving any vehicle without this coverage is illegal and can result in penalties and potential imprisonment.

Third party car insurance protects you financially and legally if your car causes injury, death, or property damage to a third party. This insurance excludes coverage for damages to your own vehicle. A third party liability policy offers unlimited compensation in the event of death and up to Rs. 7.5 lakh for damages to third-party property.

Key Features of Third Party Car Insurance

Why Do You Need Third-Party Insurance?

Car owners needs 3rd party insurance since it saves them from legal liabilities, accidental liabilities, or property damage caused to others in an unfortunate event. In addition to this the policyholder does not have to worry about paying off for medical expenses that the third party has incurred due to accidental injuries.

The compensation amount under third-party insurance depends on several factors. These include the age, income, & occupation of the affected individual, the severity of the injury sustained, and the extent of property damage incurred. If your car is older than 5 years, it is a good idea to get third party insurance coverage.

Third-Party Insurance Premium Rates

As per the recent guidelines from IRDAI, all general insurers now offer long-term third party insurance plans to car owners, which has resulted in a slight impact on the premiums prices.Effective 1st June 2022, the following premium rates apply to third-party car insurance:

Third Party Premium Rates for Electric Car

Key Benefits of Third-Party Insurance

Third-party insurance offers the right protection to the policyholder in the following manner:

1. Offers Financial Assistance

   It provides the policyholder with the required financial assistance and helps him/her to pay off the third-party liabilities without exhausting all the savings.

2. Covers Legal Liabilities

   Third party liability insurance legally saves the policyholder in case of an accidental injury, death, or property damage of the third party. Moreover, it also provides compensation to the third person in case of injury or death.

3. Fulfils Legal Mandate

   As per the Motor Vehicles Act of India, 1988, it is legally mandatory for all vehicle owners in India to at least own a third-party insurance cover to be able to use their vehicles on public roads.

4. Cost-Effective Policy

   The coverage offered under third-party liability insurance appears exceptionally cost-effective and rewarding in terms of its cost and premium rate.

5. Ensures Peace of Mind

   Liability only policy helps a vehicle owner to drive in peace since help would be provided by the insured during a road mishap.

What is Covered Under Third-Party Insurance?

Third-party car insurance protects you legally and financially if your vehicle causes damage, injury, or death to another person or their property in an accident. Mentioned below are the inclusions of 3rd party car insurance in detail:

1. Third-Party Liabilities

   Third-party liabilities result from any damages or injuries caused by the insured car to a third party during an accident. Since the accident is caused by the insured car, paying for the damages is the responsibility of the insured car's owner. Third-party liability insurance covers legal liabilities arising out of causing:

   • Property Damages- In case someone, unfortunately, rams his/her car in a third party person's property, such as the boundary wall or a shop, the third party insurance policy will pay for the loss or damages caused to that person. The motor insurer will cover your damage liability up to the limit of Rs 7.5 lakh.
   • Car Damages- If a car owner accidentally hits a third party's car with his/her own car while driving, the insurance policy will come to the rescue and pay for the damages caused to that third-party's car on the policyholder's behalf.
   • Accidental Bodily Injuries- In case the victim suffers from a disability as a result of the accident, the compensation amount that needs to be paid will be decided by the Motor Accidents Claims Tribunal. But only 50% of the compensation amount is paid by the insurer in case the victim suffers from lost limb or partial blindness.
   • Accidental Death- If the policyholder causes fatal injuries or disability to a third person in an accident, the insurance company will compensate the victim or their family on the policyholder's behalf.

2. Personal Accident Cover

   Car insurance companies also offer personal accident cover to the owner-driver of the insured car under third-party car insurance. As part of this cover, the owner-driver of the car is granted compensation in case he/ she ends up suffering from a disability or dies as a result of the car accident.
   In case of the death of the policyholder, the compensation is paid to the nominee appointed by the car owner. The compulsory personal accident cover for the owner-driver is available for up to Rs. 15 lakh.

What is Not Covered Under a Third Party Insurance?

Like in the basic motor insurance plan, the standard third-party insurance is not applicable to certain situations. The following coverage is not provided under a third party car insurance policy:

• Own Damages - It does not cover any damages sustained by the insured car, be it accidental damages, fire damages, damages due to natural & manmade calamities, or theft.
• Drunk Driving - It does not cover any third-party liabilities if the car was being driven under the influence of alcohol or drugs.
• Invalid License - It does not cover any third-party injuries or damages if the driver of the insured car has an invalid driving license.
• Outside Geographical Limit - If the insured car causes third-party damages or injuries outside the geographical limit as specified in the car insurance policy, it will not be covered.
• Unauthorized Usage - A third party liability insurance does not cover any third-party injuries or damages caused while using the insured car for illegal activities, racing, commercial purposes, etc.
• Contractual Liability - It does not cover any claims arising out of contractual liability.
• Undesignated Driver - If any individual, other than the owner of the car or the designated driver was driving the vehicle, the resultant damages or injuries to the third party are not covered.
• Substantial Loss - Third party insurance for car does not cover any accidental loss or damage sustained by the third party, which has accrued from any substantial loss.
• Nuclear Perils - It does not include any liability caused by a nuclear weapon or radioactive contamination directly or indirectly.
• War - This insurance policy does not cover any damage, loss, and/or liability caused to the third party due to invasion, war, or any other war-like operations.

The details in the list above are the most common exceptions; make sure to check the documents of the policy for a comprehensive list of exclusions.

Disadvantages of Third-Party Liability Insurance

Here are some of the disadvantages of buying third-party liability insurance:

1. No Option to Avail Add-ons

   Add-ons are additional covers that enhance your car insurance coverage. However, with third-party liability insurance, you can not opt for these options. You can only opt for them under a comprehensive car insurance policy.

2. No Coverage for Damages due to Natural Disasters

   Natural disasters, such as floods, earthquakes, tsunamis, etc., are unpredictable. If any of these calamities cause damage or losses to your car, your third-party insurance will not provide coverage.

3. No Cover for Own Damages (OD)

   Third-party liability insurance does not cover damages to your own vehicle. To protect against the costs of your own vehicle's damages, you will need to purchase a comprehensive car insurance policy.

Comprehensive V/s Third Party Liability Car Insurance

To understand the differences between comprehensive and third party insurance better, go through the table given below:

How Does Third Party Liability Insurance Work?

To understand how third-party liability insurance works, let's look at this car accident scenario:

First Party: The policyholder or the insured individual

Second Party: The insurance provider

Third-party: The individual who claims from the second party for the damages caused by the first party.

In case the insured with a third party car insurance policy is found liable for the injuries or damages to the third party, a claim will be filed against the policyholder. Now, the insurance company will cover the costs for the injured individual, including medical expenses, lost wages, and potential long-term care. This agreement protects both the insured and the third party from significant financial burden.

The person with the third party liability insurance must immediately inform the insurer about the accident. The insurance company will then register the claim against the insured by the third party.

How to Buy/Renew Third Party Insurance Online?

As per IRDAI guidelines, the insurers now offer a bundled car insurance policy (TP+OD cover) for a new car. If you have an old car, you can easily renew third-party insurance online. Here is how you can easily buy/renew third party insurance from Policybazaar Insurance Brokers Private Limited:

• From the homepage of Policybazaar.com, select the "Car Insurance" tab
• Enter your car number on the given form or select "Brand New Car" option
• Select details of your four-wheeler such as make, model, variant, fuel type
• If it's an old vehicle, the details of your car will be auto-fetched
• From the given third party insurance plans, select the one that suits your requirements
• Make final premium payment via the online payment mode
• Your third party car insurance policy will be mailed to you as soon as you make the payment.

How to Claim Third Party Insurance?

Here is a straightforward process to raise a third party insurance claim:

Step 1- Application

The victim or the legal heir of the departed can make an application against the owner of the vehicle for third-party liability compensation.

Step 2- Lodge an FIR

Once the application is completed, file an FIR with the police, furnishing the required details. He/she must have a copy of the FIR and the original records of the expenses incurred by the victim.

Step 3- Approach the Motor Accidents Claims Tribunal

After filling the First Information Report (FIR) successfully, the next step is to register the case with Motor Accidents Claims Tribunal.

Step 4- Get the Cover Amount

The compensation limit is not pre decided . The insurer compensates the full amount decided by the court of law. However, IRDA limits the coverage for property damage to up to Rs 7.5 lakh.

NOTE: The police complaint must have the following information:

• Driver's Licence Number
• Witnesses' name and contact details (if any)