5 Things to Know about Third-party Motor Insurance

Third party motor insurance is the most fundamental prerequisite by law to drive a vehicle in India and is the most economical insurance coverage option you can get. Here are a few things you should know about third-party motor insurance before buying it.

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1. What is Third-Party Motor Insurance?

Third party motor insurance is a kind of insurance under which the insurance company agrees to indemnify the insured person, if he is sued or held legally liable for injuries or damage done to a third party. For example, if you were to crash into another car and the accident turns out to be your fault, then your liability to the driver of the other car would be covered, although you would not be able to claim for damage to your own.

2. What is Covered?  

Third-party motor insurance covers you against:

  • Death or bodily injury to a third party
  • Accidental death of a third-party
  • Damage to third party property
  • Permanent total disabilities of a third-person

3. How Does It Work?

  • Application: The application for a third-party claim can be made against the vehicle owner by the victim, the owner of the property, or the legal envoy of the deceased.
  • Police complaint: After completing the third-party claim application, a FIR must be filed with the police.  Quote the following information in the first information report:

    • Registration number of the vehicle involved in case of an accident
    • License number of the driver
    • Name and contact details of witnesses, if any.
  • Claims tribunal: Once done with FIR process, the claimant should file a case with the Motor Accident Claims Tribunal. Note that it should be under jurisdiction of the area where the petitioner resides or the accident occurred.
  • Documents: The documents including a copy of the FIR and the original records of expenses incurred by the applicant must be offered to authenticate the damages/loss.
  • Cover amount: The limit for third-party cover has not been defined in case of an accident that causes injury or death. The total compensation is borne by the insurance firm once the court decides on the amount.

4. Where and by Whom Can the Claim be Filed?

According to the Motor Vehicles Act, 1988, a motor third party claim can be filed by the affected person in a tribunal at the place of mishap, at a place where the owner of the vehicle resides, the driver involved, or the injured person or his dependants inhabit.

5. What is Not Covered?

  • The third-party motor insurance does not cover your own vehicle’s damage. For example, if you banged into someone’s vehicle then the injuries or damage sustained in the accident will not be covered under third-party motor insurance. 
  • Compensation for the damage cannot be claimed more than once. For this reason, victims cannot expect their insurer to make up for any deficit in the reimbursement that has been decided by the court.
  • In accordance with the existing structure of the tariff product, the insurers' legal liability is constrained to a maximum sum of Rs 7.5 lakhs i.e. any amount more than Rs 7.5 lakhs will be borne by the vehicle owner.
  • The insured victim needs to stick on to the terms and conditions of the insurance company while filing a third party claim. Any claim that doesn’t fall under the company’s terms and conditions will not be covered. 

If you really want peace of mind, you should surely avail the third-party motor insurance to cover your vehicle. Have a safe and happy driving!

Written By: PolicyBazaar - Updated: 26 June 2021
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