Third-Party Car Insurance: How it Works and Claim Process

Imagine you accidentally hit another car or injure a pedestrian, and the situation escalates. The question of who will pay for the loss and damages becomes unavoidable. This is exactly where third-party car insurance comes into play. Let us understand how a third-party insurance policy works and how you can file a claim in case of a requirement.Read more

How Does Third-Party Car Insurance Work?

This mandatory car insurance comes into play when the insured vehicle causes property damage or is involved in an accident, causing bodily injuries to a third person. It offers financial assistance to cover the cost of repairs and medical expenses. Let us understand how third-party insurance works:

• Accident
• Third-Party must File an FIR
• File a Claim
• Investigation
• Compensation

How to File a Third-Party Insurance Claim for Property Damage?

You can use the steps mentioned below in case of a third-party property damage claim:

1. File a Claim: You must file a claim with your insurance provider and the affected third party must file an FIR at the local traffic police station.
2. Documentation: The third party must have the car insurance details to get compensation and mention them in the FIR.
3. Survey Assessment: Once you file a claim, a surveyor will assess the damages to decide the compensation.
4. Compensation: After the claim is processed, the insurance company releases the compensation amount to be paid to the third party. Typically, the maximum compensation offered for third-party property damage is up to ₹7,50,000.

How to File a Third-Party Insurance Claim for Injury/ Disability / Death?

In case of an unfortunate injury, disability, or death of a third party, use the following steps to file a claim:

1. Filing: The third party or their dependents can file a claim through the Motor Accident Claims Tribunal (MACT). MACT will also decide the final compensation for the claim. There is no upper limit to the claim amount in case of a third-party death.
2. Documentation: Submit the FIR and insurance papers to process the claim.
3. Compensation: The Tribunal decides on compensation for third-party injury/death/disability based on the documentation provided. The car insurance company will reimburse the compensation decided.
4. Settlement: The insured and the third party can also opt for an out-of-court settlement after they reach an amicable understanding, as permitted by law.

Why is Third-Party Insurance Important?

The advantages of a third-party car insurance policy can be summed up as follows:

• Legal Requirement: Having a third-party insurance cover is mandatory under the Indian Motor Vehicle Act, 1988. All cars plying on Indian roads need to have a valid car insurance policy with a third-party liability cover.
• Traffic Fines: Car owners who do not have a valid car insurance policy with a third-party liability cover can be fined Rs. 2,000 for breaking the traffic rules. Repeat offenders may be fined Rs. 4,000.
• Financial Support: If your car has caused vehicle or property damage, then you need not pay out of your pocket. Your insurance company will pay for the damages if you submit a third-party claim.

What is Not Covered Under Third-Party Car Insurance?

Here are some of the things that are not covered under a third-party car insurance:

• Death or bodily injury to anyone in the insured car.
• Damage sustained by the insured car.
• Loss of accessories or components in the insured car.
• Accidents that occur when an unlicensed driver or an unsupervised driver with a learner's licence is driving are not covered.
• Accidents caused by an intoxicated driver are also not covered.

Conclusion

A third-party liability cover offers sufficient financial coverage in the event of an accident or property damage. With this insurance cover, the car owner need not face unexpected financial expenses in the event of an accident. As third-party insurance is mandatory under Indian traffic rules, all car owners must sign up for this cover to avoid breaking the law.