Demystifying Third-party Insurance

If you are planning to buy a car, you must be mindful of the need to purchase third-party liability insurance. While third-party insurance is a statutory requirement under the Motor Vehicles Act, it makes sense to get the coverage, given the condition of Indian roads and the way people drive on them.

In 2013, India had the highest number of road fatalities (the latest year for which data was available) at more than two lakh deaths. Driving on the country’s roads can be dangerous: potholes, speed bumps, indiscipline among drivers, and the rush to get ahead can all be killers. In such a situation, insuring your own vehicle is not enough. You also need protection, in case your vehicle is involved in an accident that results in the injury or death of someone else.

What is Third Party Insurance?

This is where third-party liability insurance kicks in. The third-party can include everyone other than the two parties signing the contract, be it one walking on the road or a passenger in a vehicle involved in the accident. Therefore, third-party insurance provides assured compensation to anyone involved in a road accident while it was not their fault.

This type of insurance also involves the help of a lawyer.It is fault-based, which means the fault of the insured has to be proven first, i.e. that the injury occurred as a result of the fault of the insured must also be established.

Insurance Regulatory and Development Authority is responsible for fixing the premium for third-party liability cover.

How can it help?

However, third-party liability insurance remains an underused tool. For example, “own damages” claims in 2010-11 totaled nearly Rs. 3,460 crore while third-party claims added up to only Rs. 1,300 crore. More people, therefore, can benefit from claiming third-party insurance by following the process of filing a claim.

The process involves lodging an FIR with the police and getting hold of the charge sheet. Following this, a case has to be registered at the Motor Accidents Case Tribunal. This must be done within 60 days of the accident, although the courts are known to be lenient and sometimes admit cases that are even a year old.

The case must be filed in a tribunal with jurisdiction over the area where the accident had taken place. At the time of filing the case, you will have to submit a copy of the FIR, proof of the expenses you want to claim, and the surveyor’s report (in case of damage to property).

The court will summon the driver and a representative of the insurance company. The insurer will then check whether the driver had a license and insurance policy prior to it paying the claim. The insurance company will help only if you claim for death, injury, or loss of property.

In case you are claiming for damage to your vehicle on third-party insurance despite you having a comprehensive vehicle policy, your insurance company will not help you out.

If you have received a court notice saying a third-party has filed a claim against you, there are two options for you. The customer can either ask the insurance company to take care of the legal proceedings on its own or authorize it to appoint a lawyer for the case. Here again, the insurance company will check to see if there has been any breach of the terms and conditions.

Third-party insurance can be of great help in times of need. It can protect you financially from the burden of compensating someone who you might have hurt in an accident. Go, get your insurance cover today!