Third Party Insurance

Third Party Insurance, also known as a liability-only policy, is a mandatory insurance cover in India as per the Motor Vehicles Act, of 1988. This policy provides financial and legal protection against third-party death, injury, and property damage caused by the insured vehicle.

While it offers unlimited compensation for third-party death, property damage is capped at Rs. 7.5 lakh. It’s important to note that third party insurance doesn’t provide coverage for any damage to the insured vehicle itself.

Instead, the insurance provides financial protection against any damages caused by the insured vehicle to anything or anyone else.

Key Features of Third Party Insurance

• Third-Party Damages: Covers legal liabilities for death, injury, and property damage to third parties.
• Premium Rates: Nominal rates set by the Insurance Regulatory and Development Authority of India (IRDAI).
• Mandatory Requirement: Legally required for all vehicle owners in India.
• Compensation Limits: Unlimited for death, up to Rs. 7.5 lakh for property damage.
• Personal Accident Cover: Offers coverage for the owner-driver against accidental injury or death.

Third Party Insurance Premium Rates

Effective from June 1st, 2022, here are the premium rates based on engine capacity:

Premium Rates for Electric Cars

Why Do You Need Third Party Insurance?

• Legal Requirement: It’s mandatory to have third party insurance to legally drive on Indian roads.
• Financial Assistance: Covers expenses related to third-party injuries, death, and property damage, protecting you from unexpected financial liabilities.
• Legal Liabilities: Protects you from legal consequences arising from accidents involving third parties.
• Cost-Effective: Offers essential coverage at a relatively low cost.
• Peace of Mind: Provides assurance that you are covered against potential third-party claims.

Coverage Under Third Party Insurance

What is Covered?

• Third-Party Liabilities: Covers financial liabilities arising from damage or injury to third parties.
  • Property Damage: Pays up to Rs. 7.5 lakh for damages to third-party property.
  • Car Damage: Covers repair costs for third-party vehicles damaged in an accident.
  • Bodily Injuries: Compensates for injuries or disabilities suffered by third parties.
  • Accidental Death: Provides compensation for fatalities caused by the insured vehicle.
• Personal Accident Cover: Offers compensation up to Rs. 15 lakh for the owner-driver in case of accidental injury or death.

What is Not Covered?

• Own Damages: Does not cover damage to the insured vehicle.
• Drunk Driving: No coverage if the vehicle was driven under the influence of alcohol or drugs.
• Invalid License: No coverage if the driver lacks a valid license.
• Outside Geographical Limits: No coverage for incidents outside policy limits.
• Unauthorized Usage: Excludes coverage for illegal activities, racing, or commercial use.
• Contractual Liability: Does not cover liabilities arising from contractual obligations.
• Undesignated Driver: No coverage for third-party damages caused by unauthorized drivers.
• Nuclear and War Perils: Excludes liabilities from nuclear or war-related incidents.

Comprehensive vs. Third Party Insurance

How to Claim Third Party Insurance?

1. Application: The victim or their legal heir can apply for compensation against the vehicle owner.
2. File an FIR: Lodge a First Information Report with the police, including necessary details.
3. Approach Tribunal: Register the case with the Motor Accidents Claims Tribunal.
4. Receive Compensation: The court will determine the compensation amount, with property damage capped at Rs. 7.5 lakh.