Owning a vehicle in India comes with a lot of responsibilities. Apart from following traffic rules, you must also have an insurance policy for your vehicle. As per the Motor Vehicle Act of 1988, it is mandatory to have at least third-party motor insurance for your vehicle before plying it on Indian roads.
In this article, we will give you a basic understanding of third-party motor insurance. So, let's start:
What is Third-Party Motor Insurance?
Before understanding third-party insurance, you must know who are first-party, second-party, and third-party. In insurance terms, the first party is the person who takes the insurance, the second party is the insurer, and the third party is any other individual.
So, a third-party insurance policy provides insurance coverage to a third-party property and person in case of damage or loss through the first party’s insured vehicle. In other ways, we can say that it is only an ‘act-only’ cover and does not include coverage against losses or damages to own vehicle.
Besides third-party insurance, motor insurance companies also provide comprehensive insurance wherein damages or losses suffered by your vehicle are also covered apart from the third-party cover.
Why is Third-Party Motor Insurance Important?
In India, it is necessary to have at least a third-party motor insurance policy.
By having this policy you fulfil the legal obligation to insure your vehicle before driving it on Indian roads.
It provides you peace of mind that your vehicle is insured against third-party losses and damages in case of an accident by it.
What is Covered in Third-Party Motor Insurance?
The following coverage is provided under third-party liability insurance:
Third-Party Vehicle Damage: The policy provides coverage for third-party vehicle in case it gets damaged in an accident or collision by your vehicle. The repair cost of the damaged vehicle is paid by your insurance provider.
Third-Party Bodily Injury: If a person gets injured by your vehicle in an accident, you are legally liable to pay for his/her medical expenses. The cost of these medical expenses is covered by third-party insurance. Moreover, if someone dies in an accident from your vehicle or gets disabled, the policy pays the compensation on your behalf to the victim’s family or him/her respectively.
Third-Party Property Damage: In case of an accident, if someone’s property gets damaged by your vehicle, the insurer pays for its repair on your behalf. However, the maximum compensation that an insurance company offers under third-party property damage is Rs.7.5 lakh, but if the court decides that the reimbursement is more than this, you (the policyholder) have to bear the extra amount from your pocket.
Benefits of Buying a Third-Party Vehicle Insurance Policy
Here are the benefits that you will get if you buy a third-party insurance policy for your vehicle:
You Get Financial Assistance and Legal Protection: As you know, it is illegal to run any vehicle without an insurance policy in India. A third-party vehicle insurance policy provides you with this legal protection. Moreover, you get financial assistance in case of damage or losses to a third-party person or property in case of an accident by your vehicle.
Affordable Insurance Coverage: Due to its limited coverage, a third-party motor insurance policy is more cost-effective than a comprehensive motor insurance policy.
Gives You Peace of Mind: Peace of mind is something that you get with a third-party motor insurance policy. In case of an accident rather than thinking about the financial burden that you have to bear, you can think about the ways through which you can make the situation better as a third-party car insurance policy takes care of the financial issues.
How to Claim Third-Party Vehicle Insurance?
You can claim your third-party motor insurance policy by following the below steps:
Step 1: Call your insurer and inform them about the accident. You must do this within 24 hours of the accident or within the stipulated timeline mentioned in your insurance policy document.
Step 2: After this, you must file an FIR at the nearest police station from the accident spot and keep its copy.
Step 3: Fill out the claim form and submit it to the insurer with all the required documents. You can download the claim form from the insurer’s website or ask the insurance company to send it to your email id.
Step 4: Once the insurance company receives your claim form, it will assess the damage by sending the surveyor. If the company agrees with your claim, you will be paid by them.
Who Should Take Up Third-Party Vehicle Insurance Policy?
Anyone who drives a car or two-wheeler can take up third-party vehicle insurance. Since its coverage is lower than comprehensive motor insurance so people generally do not prefer it, but:
If you drive a vehicle very occasionally, then you can insure it with third-party motor insurance.
If your vehicle is older than 5 years, you can prefer third-party motor insurance.
If you want protection from third-party losses only in case of an accident, then you should also get this policy.
Exclusions of Third-Party Insurance
Here is the list of scenarios that a third-party motor insurance policy does not cater to:
The primary purpose of third-party liability insurance is to assure any compensation claims made for third parties as a result of an accident. It does not provide coverage against the damages or losses incurred to your vehicle. For this, select a comprehensive motor insurance policy.
Any damage caused due to war, invasion, or mutiny
Any kind of damage during racing, speed testing, reliability trial, etc.
If it is a drinking and driving case.
If the accident was caused with some intention or was deliberate.
If the driver was driving without a valid driving license or is underaged.
If the vehicle is stolen.
Conclusion
Your car is your prized possession, and it is always advisable to opt for a comprehensive car insurance policy that covers you for everything. However, if because of any reason, you do not want comprehensive insurance coverage for your vehicle, you can opt for a third-party motor insurance policy. It offers you a basic and mandatory insurance coverage that you need for plying your vehicle on Indian roads.
