Third Party Car Insurance: All You Need to Know

There are major chances of death or bodily injuries or disabilities due to a car accident. The chances of a public/ private property getting damaged in this act are even higher. But, thank the Almighty. There is something called as 'Third Party Insurance' that acts as a savior.

Not sure what all is linked to the third party liability insurance? Here's a quick 'dekho' of third party insurance that says it all.

What is Third Party Car Insurance?

Third party Car Insurance protects you from any legal liability due to the involvement of your own car in an accident. Be it death, disability, injury or sizeable property damage to a third party, your insurer compensates for it. Hence, you are shielded from the financial liability arising towards a third party.

Also termed as an 'act only 'cover, the third party car insurance reduces the car owner's worries with its scope of coverage offered during an accident.

The Motor Vehicles Act, 1988 has made Third party insurance mandatory for vehicles plying on the Indian roads. There are no two ways about it. You must have a third party insurance for your vehicle. You just cannot avoid it. A car without a third party insurance is deemed illegal. If you are tech-savvy you can buy third party car insurance online by approaching insurance companies.

What does Third Party Car Insurance Cover?

Third party car insurance covers a couple of things. What are they? Let's find out.

Third Party legal liability: The legal liability of the cover in case of death or injury to the third party is unlimited. In case the third party lose his/her life due to an accident, the insurance company offers death compensation. Yet, the compensation to the victim is decided by the Motor Tribunal. This is based on various factors like impact on the victim's family and not limited to the earning capacity of the victim.

In case the third party gets injured due to the accident, the third party insurance for car covers right from minor injuries to major fractures.

Any partial or permanent total disability sustained during an accident, the third party liability covers the compensation of the loss of the victim.

Though bodily losses cannot be compensated, 3rd party car insurance offers a financial compensation.

Property Damage: If the accident results in damage to any property, then a compensation for the losses occurred to the property are settled. And this is done by the third party insurance cover. As per the IRDA norms, third party property damages are covered up to a sum of Rs.7.5 lakh. However, you have the option to restrict the third party car insurance coverage up to Rs. 6,000. If you opt for a lesser coverage, it will lower the premiums involved.

Personal Accident Cover for Owner: Driver: In an accident, the death or any bodily injuries sustained by the owner-driver of the vehicle is covered by the 3rd party insurance. The limits for compensation are as below:

NATURE OF INJURYSCALE OF COMPENSATION
Death 100%
Loss of two limbs or sight of two eyes or one limb or sight of one eye 100%
Loss of one limb or sight of one eye 50%
Permanent total disablement from injuries other than the one’s named above 100%

Note: The above cover is subject to:

  • The owner-driver is the registered owner of the vehicle insured therein

  • The owner-driver is the insured named in the policy

  • The owner-driver holds an effective driving license, in accordance with the provisions of Rule 3 of the Central Motor Vehicle Rules 1989, at the time of accident

What does Third Party Car Insurance Not Cover?

Unlike the main car insurance policy, there are a few exclusions that are not covered under the third party insurance. Mentioned below are a few of these conditions:

  • Accidental loss/damage/liability borne outside the specified geographical area

  • Claims that arise out of any contractual liability

  • The usage of the car that is not in line with the commonly stipulated 'Limitations as to Use'

  • The vehicle was being driven by someone who isn't the owner or designated driver

  • Accidental loss/damage incurred by the third party that has resulted from any consequential loss

  • Liability, directly or indirectly caused by radioactive contamination or nuclear weapons

  • Loss, damage and/or liability caused by war, invasion and other warlike operations

The above list features the most common exclusions. For an exhaustive listing, refer your car insurance documents.

Third Party Premium Calculator

The IRDAI decides the premiums for the third party car insurance. IRDA has standardized the third party car insurance rates for third party liability insurance with effect from 1st April, 2017 as below:

DESCRIPTION OF VEHICLEREVISED PREMIUM FOR FY 17-18 (RS.)
Not exceeding 1000cc 2,055
Exceeding 1000cc but not exceeding 1500cc 2,863
Exceeding 1500cc 7,890

The third party car insurance premium calculator works out the premium rates based on the engine capacity of the car, the premium for personal accident owner driver cover and the goods and service tax which is 18%.

Let's take a simple example to see how a third party car insurance calculator works:

Say, you have a car whose engine capacity exceeds 1500 cc. Since the third party premium includes cover for Personal Accident Liability too, you would be paying the below premium: Basic TP Premium + Personal Accident Owner Driver + GST 18%= Total Third party premium Rs.7, 890 + Rs.100 + Rs.1438.20 = Rs.9, 428.20/-

Note: The IRDA revises the third party car insurance rates every year.

Some insurance companies sell third party insurance online. So, you can avail this facility by approaching individual insurers.

Claim Settlement for Third Party Car Insurance

You need to patiently follow the right procedure for claim settlement. Why? Read on. Third party liability insurance follows a slightly different approach. As per the Motor Vehicles Act (1988), all disputes should be settled in the Motor Accident Claims Tribunal at the location of the accident.

In case you are the victim of the accident and wish to claim on the third party insurance, below are the first few steps you need to take:

  • You must obtain the insurance details from the owner/driver of the vehicle involved.
  • File the First Information Report (FIR) of the accident with the local police station.

Basis the above information, file for the compensation in the MACT (Motor Accident Claims Tribunal). This is to be done at the location of the accident or where the affected person lives.

In most of the cases, the vehicle owner will try to make an out of the court settlement. But, if the accident involves the death of any person, any legal heir of the deceased can file a case. Under the third party insurance, they can get sufficient compensation.

Note: The Tribunal scan all the evidence and subsequent testimonials presented in the case. Post that, they finally arrive at the judgment. The owner-driver or the policy-holder will be summoned along with any witnesses for the final arbitration.

Be cautious, as the process requires coordination between different parties involved. It can take as long as six months for the ruling of the verdict.

The Final Word

Even though third party liability is covered, your car still doesn't receive wholesome protection. In case of own car damages, you won't receive coverage under third party insurance. These include damages/losses caused to your car due to accidents, theft, natural and man-made disasters, etc.

That's why experts recommend opting for a comprehensive car insurance. It covers all the above along with third party insurance. Your premiums for a comprehensive plan is more than that of a third party plan. But then it's definitely worth it, keeping in mind the complete benefits that you receive. Though you cannot buy third party insurance online through Coverfox.com, you can certainly buy a complete package policy by comparing quotes and features of different insurers under one roof!

Always remember to carefully weigh the exclusions and inclusions of a plan before buying one.

For any further questions regarding the claim process, please contact Coverfox at 1800-209-9930.

FAQs on Third Party Car Insurance

Being a good driver, do I still need to buy a third party motor insurance?

Yes. As per the Indian Motor Vehicles Act, 1988, third party motor insurance is a mandatory component of your motor insurance. Even if you are good driver, you may end up in an accident due to no fault of your own. The offending driver is insured with the third party motor insurance allowing you to raise a claim for your losses.

What is the maximum compensation offered by a third party motor insurance policy?

When it comes to bodily injuries or death, there is no specific amount set for the compensation amount. However, in the case of third party property damage, the insurer would be accountable for a maximum amount of Rs. 7.5 lakhs.

If I had an accident and I need to raise a claim on the third party insurance policy, how much time do I have to do so?

You have a span of about 60 days from the date of the accident to file a case with the Motor Accidents Case Tribunal. However, the earlier the better.

What documents are required to raise a third party car insurance claim?

In order to raise third party car insurance claim it is advised to have the following documents readily available.

  • Copy of the FIR (First Information Report) as registered by local police station
  • Documented proof relating to the expenses being claimed
  • Report from the surveyor if damage to property is involved
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