Third Party Car Insurance

Third-party motor insurance or third-party liability cover is a statutory requirement for all the vehicle owners in India as per the Motor Vehicles Act, 1988. This was made keeping in view the safety of the drivers, passengers and pedestrians a while maintaining the decorum on roads. Third party insurance is also called as the ‘act only’ motor insurance cover. The beneficiary is actually a third-party person who has been injured or a third-party property that has been damaged by the insured. It offers protection to the insured in case of third-party liabilities arising due to loss or damage to a third-party caused by an accident.

Third-Party Car Insurance Policy

Third party insurance is the most basic form of motor insurance policies that one needs to buy in India. A third-party that is involved in an accident or has suffered bodily injuries or damage to property from a vehicle, he/she can file a third-party claim for compensation as per the law.

The 3rd party car insurance also covers any legal liability arising in case of third-party accidental death.

How Does Third Party Insurance Work?

3rd party insurance proves to be a life saver under the following circumstances-

  • A third party can claim for a liability compensation for the damages caused by the insured vehicle. One can even claim for death compensations if the insured vehicle is at fault.
  • Under a liability insurance policy, the insurer pays for the losses to the third party.
  • Compensation is provided as per the decision made by the Motor Tribunal. In case of property damage, the third party can be compensated up to Rs. 7.5 lakh.
  • For minor damages, it can be settled outside the court as well.

Here’s a quick rundown of the some of the terms that are used for the parties that are involved in a car accident-

  • The policyholder or the insured person is addressed as the first-party
  • The insurance company is addressed as the second-party
  • The person who files a claim against the loss or damages caused by the first party is called as the third-party

Benefits & Key Features of Third-Party Insurance

Basic third party car insurance offers protection to the insured under the following circumstances-

  1. 1.In case of bodily injuries or death of a third party
  2. In case of third-party property damage
  3. Accidental death of the car driver/owner
  4. If the car driver/owner suffers from permanent or total disabilities

Elucidated below are some of the benefits that are provided under third-party liability cover-

  1. Cost Effective- Third-party Liability Insurance comes with a low cost as compared to the comprehensive car insurance. It is the most basic insurance form that is mandatory by the Indian vehicle law.
  2. Peace of Mind- Draining off your savings to an affected third-party can be financially and emotionally stressful. Whereas, a dedicated third party car insurance policy can save you from the financial and emotional hardship.
  3. Hassle-free Process- It is quite convenient and time-saving to renew or buy third party car insurance online. One can purchase it in a simple, faster and hassle-free manner as per their convenience.
  4. Round-the-clock Assistance – One major benefit of applying for third party insurance online is that it can be purchased anytime, anywhere from the online portal, unlike the traditional offline methods. Moreover, the insured has the access to round-the-clock assistance.

Coverage in Third Party Car Insurance

Here is a list of things that are covered in 3rd party insurance policy –

  • Coverage for Death and Injury – Unlimited cover is provided in case of death or bodily injuries. In case of accidental death, compensation is provided as decided by the Motor Tribunal. It is decided on the basis of the impact of the damage caused to the victim.

In case of accidental injuries, third party insurance compensates from minor to major injuries, including fractures. Partial or permanent disabilities resulting due to an accident are also covered.

  • Property Damage- Third party liability insurance also compensates for the accidental damages caused to a third-party property. Up to Rs. 7.5 lakh of compensation is provided for third party property damages as per the IRDA norms. However, the insured can opt for lesser compensation Thus, can reduce the cost be premium.
  • Personal Accident Cover for the Owner/driver- If the owner or driver suffers from bodily injuries or the accident results in death, 3rd party insurance will cover the loss.

Third-Party Insurance for Private Vehicle:

Policy Coverage for Private Vehicles-

  • Death and bodily injuries of the third-party
  • Third-party property damage
  • An accident resulting in death and total disabilities of the owner/driver of the insured vehicle

Third Party Insurance for Commercial Vehicle:

Policy Coverage for Commercial Vehicles-

  • Third-party death and bodily injuries
  • Legal liabilities arising due to the damage caused to a third party.
  • Third-party property damage
  • Permanent disabilities to the owner/driver resulting due to an accident

Table with the Scale of Compensation for Liability Insurance: 

Nature of Injury Scale of Compensation
Death 100%
Permanent total disabilities 100%
Loss of both the limbs or sight of both eyes or loss of sight of one eye or one limb 100%
Loss of sight of one eye or one limb 50%

What is not covered in Third Party Car Insurance?

Exclusions of third-party insurance are as follows –

  • Claims arising due to contractual liabilities
  • Accidental loss or damage or liabilities arise while the vehicle was being driven by someone other than the designated driver or owner
  • Usage of the vehicle outside the specified geographical area
  • The usage of the private car for any other purpose other than the listed one in the insurance papers
  • Third-party loss or damage resulting due to any consequential loss
  • Liabilities resulting due to nuclear radiations or weapons
  • Loss or damage resulting due to war like conditions
  • Please refer to vehicle insurance policy documents for the complete list of exclusions and detailed understanding.

Third Party Car Insurance Online Premium Calculator

Third party insurance premium rates are revised annually by the Insurance Regulatory and Development Authority (IRDA). The premium varies based on the engine capacity (cc) of the insured vehicle. For instance, the premium for a 1000cc car will be lesser than a 1500 cc car.

Third party insurance online calculator is used to compare the best plans online. It helps to derive personalized car insurance plans online.

Using 3rd party car insurance online premium calculator one can find out how changing certain variables can impact the overall insurance premium amount.

Apart from the car make and model, there are certain other factors that define the car insurance premium including engine capacity, GST and personal accident cover for owner-driver etc.

Third party liability car insurance premium rates 2018-2019

IRDAI revises the third-party premium rates every year on the basis of the motor insurance claims raised and settled in the past.
As laid down by the Insurance Regulatory and Development Authority of India (IRDAI), the third-party premium rates for private cars in 2018 are as follows –

Engine Capacity ( cc) Third-party liability premium for 2018-19
Less than 1,000 cc Rs.1,850
1,000 cc to 1,500 cc Rs.2,863
More than 1,500 cc Rs.7,890

All You Need to Know About Third Party Insurance

What is required from the insured’ end?

  • When emergency strikes or there is a car accident, the policyholder needs to immediately intimate the vehicle insurance provider about the incident
  • In any case, if the insured is held responsible for the accident or a third-party believes that the insured was responsible- then it’s certain that the liability claim will be raised and the insurer will compensate for the loss
  • So, make sure that the incident is in the knowledge of the insurance company

What are the Information Required after an Accident?

Post an accident, the insured needs to furnish the following details to the car insurance provider –

  • Personal details of the insured
  • Information about other vehicles or drivers
  • Brief description of the incident along with date, time and location
  • Visibility conditions and weather conditions at the time of the accident
  • A description of the damage and injuries caused to other vehicle, property, passengers or drivers
  • Photographic evidence of the incident ( if possible)
  • Contact details of the witnesses ( if any)
  • Crime Reference Number should be provided to the insurer if the police was involved

If it is proved that the insured was not at fault, then he/she can make a claim against the third-party, and their insurer will compensate for the loss. The insurance company shall compensate the out-of-pocket expenses like car repair service, car hire, compensation for injuries, loss of earnings etc.

Important Guidelines of Third Party Insurance

  • In case of an accident, it is likely that both the parties would be having 3rd party insurance cover since this is mandatory in our country. Otherwise, it could turn out to be a costly affair, for both the parties.
  • It is not possible to make a claim for own damages, that is only possible with a comprehensive vehicle insurance policy. Only the victim can file third party insurance to get compensation from the insurer of the car that caused the damage.
  • Third party insurance claim process usually takes the following course-
    • Reporting the incident to the police and getting a charge sheet for the same
    • Filing a case with the Motor Accident Claims Tribunal
    • Examining the available evidence
    • Fixing liability after hearing both first and third-party
  • If the tribunal rules in the favour of the insured, all the damages that were sustained during the accident would be compensated.

Making a claim after an accident can be a complex process, but we have simplified it below for a better understanding.

Third Party Car Insurance Claim Settlement

To avail the benefits of the claim it is required that-

  • The owner-driver has a valid driving license
  • The policy is issued in the name of the owner-driver
  • The car is registered in the name of the owner-driver

Third Party Insurance Claims Filing Procedure

The claims filing process depends on the type and consequences of the accident. Here’s a quick rundown of the claims filing process for 3rd party car insurance-

Claim Process for Third-Party Property Damage-

  • To report third-party property damage, the claim can be filed through the Motor Accident Claims Tribunal in that area.
  • The claimant should acquire the insurance details of the vehicle that has caused the damage
  • A police FIR report should be filed stating the sequence in which the damage/ accident took place
  • FIR copy and insurance details to be submitted at the time of filing the claim
  • Based on the trial by the court of law, the claimant will be compensated basis the documentation
  • Up to a maximum of Rs.7,50,000 is compensated for property damage

Claim Process for Death, Injury, or Disability

  • In case of an accidental injury, disabilities or death of a third party, the individual can file a claim for reparation from the car owner. In case of death, dependents of the demise can file the claim
  • File an FIR in the nearby police station, with a brief description of the incident
  • The insurance details of the car owner should also be obtained
  • All the above-mentioned documents and information should be submitted to the Motor Accident Claims Tribunal of that area where the incident took place.
  • Based on the documents, the tribunal will give the final verdict
  • Depending upon the case, it is permissible to go for an out of court settlement

Note – All the original documents need to be submitted at the time filing the claim.

Things to Consider When Making a Third Party Car Insurance Claim:

Important considerations under third party insurance are as follows-

  • For accidental claims, gathering evidence is important.
  • It must be proved that the other party was at fault.
  • Immediately file a police report and inform the insurer
  • The compensation will be decided by the tribunal.
  • A claim should be filed only for major damages and accidental death.
  • Minor damages can be settled out of the court
  • Third party insurance claims can also be made in case of disabilities resulting from an accident during the policy period
  • Car insurance companies usually subrogate the claim against another insurance company in the event of accidental disabilities or death.

Third-Party Insurance FAQs

Q1. What are the two types of Car Insurance in India?

A. One is third party insurance, which is mandatory for all the car owners in India. Second is the comprehensive car insurance for enhanced protection.

Third-party car insurance offers protection against losses, damage, and injuries caused to a third person, vehicle or property. It does not cover damages incurred on the insured vehicle.

Whereas, a comprehensive car insurance policy compensates for damages caused to the insured, along with co-passengers and a third-party. It is the most preferred one as it offers protection against theft, fire, accident, and natural calamities.

Q2. What are the Exclusions of the Third party liability Insurance?

A. Third party car insurance does not cover the following –

  1. Injuries caused to the Policy Holder- Any injuries that are caused to the insured due to his own fault are not covered under liability insurance.
  2. Own Damage of the Insured Vehicle – It doesn’t cover claims arising due to the theft, and damage to the insured vehicle.
  3. Driving under the Influence of Alcohol- If the driver was found to be driving under the influence of alcohol and drugs.
  4. Routine Wear and Tear: Normal wear and tear due to the car age will not be covered.
  5. If the Car is Not Used for Listed Purpose- Usage of a car for any other purpose than mentioned in the insurance documents.

Q3. What is the eligibility criterion to buy a third party car insurance policy?

A. Anyone who holds a valid driving license can buy third party cover. Provided the vehicle is registered with the regional transport authority. There are various vehicle insurance providers in India that offer third party liability insurance.

Q4. What are the documents required to buy third party car insurance online?

A. Zero documentation is required to buy a third party car insurance online. You can get your car insurance quote within a few seconds by entering your registration number in the online form. This makes things really simple.

However, you will have to provide details like:

  • Car registration number
  • Engine number
  • Chassis number
  • Previous car policy number (if you have any)
  • Car manufacturing date (mm/yy)
  • Date and city of car purchase
  • Your contact details (address, phone no. and email id)
  • You should also have a copy of your car’s RC book.

Q5. What is the maximum compensation that I can get under third party car insurance?

A. The compensation for bodily injuries and third-party death is decided by the court of law. Whereas, for third-party property damages, the maximum compensation limit is up to Rs.7.5 lakhs.

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