What Is Covered Under Third Party Car Insurance Policy?

It is mandatory to have third party car insurance in India as per the law. It is beneficial for the driver because it offers coverage against bodily injuries, covers loss or damage caused by the insured vehicle to a third-party vehicle, property or person.

What is Third-Party Insurance?

Third party insurance will only cover damage caused by the insured vehicle to another party. It will not pay for any damages that are caused to the insured car. The policy is usually cheaper in comparison to a comprehensive car insurance plan.

Third party car insurance is a legal requirement for car owners in India, as per the Motor Vehicle Act, 1961. As a vehicle owner, if you want to save yourself running from pillar to post, for the damage that has been caused to the third party arising out of an accident, then the financial loss or physical damage can be taken care of in a seamless and convenient manner.

Why Third-Party Insurance for Car Works –

  • Lesser Premium – It only includes the cost you need to bear for the third-party vehicle/structure, therefore the amount of premium to be paid is lower than a comprehensive plan.
  • If your vehicle is less than 7 years old – If your car is new or less than 7 years old, paying the premium amount would be a safer bet, rather than paying for the lump sum damage, But if your vehicle is older than that, you might want to consider taking a third party insurance policy. The compensation amount is better when the vehicle is not that old and it can be up to 7.5 lacs in case of third party vehicle damage.
  • Easy & Convenient – Paying for someone else’s loss arising out of your mistake can be painful. You do not need to bear the stress of financial and legal proceedings, as your insurance provider will provide you cover from that.

Have a Look at the Coverage Provided Under Third Part Insurance –

Car insurance companies are liable to pay damages to the insured in case of an accident resulting while driving the insured vehicle. The compensation is subjected to policy limitations. Under third-party insurance, the insurer is legally liable to recompense for the following-

  1. In case there are any bodily injuries or death of any passenger inside the vehicle due to an accident or collision, the insurance company will compensate for the loss. This shall not cover the driver or the insured person. It will cover the passengers including the family members or employees who were riding as passengers in the insured vehicle. If the accident happens while mounting or dismounting that will also be considered.
  2. Any accidental damage caused to a third-party property or material, excluding those owned by the driver or the insured.
  3. It includes third party fire and theft cover as well.
  4. As per the policy terms and conditions, the insurer is liable to compensate the petitioner as per the instructions or judgment released by the court. The car insurance provider shall pay for the damages to the legitimate claimant. This shall cover judicial expenses and any other charges (excluding fines or penalties.
  5. In the event of the death of any person who is entitled to insurance, then the legal hires of that person will receive the compensation on his behalf as part of the third party motor insurance. The compensation amount is subjected to policy terms and conditions.
  6. In the event of an accident involving third-party insurance to more than one person, the insurer is liable to pay the cumulative amount of insurance due to all the members.
  7. Car insurance companies, compensate all the expenses and costs for which the insurer has given prior consent.

Exceptions under Third Party Car Insurance-

Third party insurance does not compensate for accidental loss or damage or third-party liability under the following circumstances –

  1. Any accidental loss or damage that has taken place outside the specified geographical area
  2. Accidents that take place outside the public road or public transport area as specified in the car insurance policy.
  3. Accidental claims arising under the below-mentioned circumstances are also not covered –
  • Natural calamities like earthquake, floods, storm, hurricane, volcanic eruptions etc.
  • The act of foreign enemies, riots, rebellion, civil war, nuclear war, ionizing radiation etc.

Benefits of Third Party Car Insurance Policies –

1. Provides Financial Assistance and Legal Cover

It will take care of the legal or financial liabilities arising due to an accidental collision or death. The immediate beneficiaries are neither the insurance company nor the insurer, but a third-person. And it is the most essential benefit third-party insurance secures for the driver/owner of the car involved in such circumstances.

2. Third Party Insurance Ensures Peace of Mind

It ensures peace of mind while dealing with a road emergency that completely hinges on financial payments. Instead of fretting over such unanticipated expenses, you will be able to cope up with the incident.

3. Easy to Procure

Third party liability insurance policies can be easily purchased or renewed online. Anyone can compare car insurance online and buy the one that most suitable as per their time and convenience. You can checkout different car insurance plans that offer third-party cover. You can look at HDFC Ergo car insurance plans, oriental insurance and various other options.

What is the Difference between Third-party Insurance & Comprehensive Car Insurance

The major difference lies in the range of protection that is offered to the insured person and the vehicle. Under third-party car insurance coverage is limited to the claims of a third party. While in a comprehensive car insurance plan there are multiple protections that are provided to the insured and the vehicle.

Third Party Insurance Comprehensive Insurance
Lesser insurance premium Extended coverage but insurance premium is considerably high
Covers accidental death and bodily injury caused to a third-party only Covers third-party liability and accidental loss or damage caused to the insured as well
Covers third party property damage Compensates for damages owing to natural calamities and man-made disasters
Legal liabilities are taken the care off Multiple issues are taken care off

To make an informed decision, it is better to understand the difference between the two and choose the one as per your needs and preferences-

  • Car Value – For low-maintenance cars, third-party liability insurance will suffice. Because cars with low value can be managed in easily and cost-efficiently. The repairs are usually affordable and lesser than the premium cost of comprehensive insurance.

For brand new cars, luxury and sports cars, it is advisable to go ahead with a comprehensive insurance policy.

  • Coverage – Third party insurance offers protection against any damages caused to third-party vehicle or property, including accidental injuries caused to other people during the event. Some car insurance companies can charge an additional cost to provider third-party property coverage.But it will not compensate for any damage that is caused to the insured person or vehicle. The scope of coverage is more in a comprehensive insurance policy. It includes third party cover along with theft, fire and accident cover.
  • Cost of Premium – The premium for a comprehensive car insurance policy is certainly more in comparison to a third-party insurance cover. 

Claim Settlement Process for Third Party Insurance

Third-party car insurance claim process usually goes like this –

  • Reporting the case to the police and get the police report for the accident
  • Get in touch with the Motor Accident Claims Tribunal and file a case
  • On the basis of the hearing and evidence from both the sides, the liabilities will be fixed.

Please note that the vehicles that are not found in a moving condition will be towed to the respective workshop to probe further.

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