Know Up to What Limit Third-Party Car Insurance is Offered!

Third-party car insurance is a financial shield that helps car owners to bear the legal liabilities arising out of injury, death or property damage to a third party, inflicted by the insured. This insurance cover acts as compensation for the third party involved in the accident. As per the Motor Vehicles Act 1988, any vehicle plying on Indian roads without this cover will be termed as faulty and illegal; thus liable to be fined.

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Third-Party car Insurance settles the expenses of a third party involved in an accident without his/her own fault; the policyholder is also benefited as all the legal expenses arise will be taken care by the insurance company. Hence, it helps both the parties by offering a win-win situation in terms of money. However, this cover doesn’t include self-damage to the insured vehicle.

But, do you know how much compensation is dedicated towards injury, death or property damage under a third party car insurance?

While making his car insurance claim, Rahul was pretty much sure that he would avail the complete amount. To his surprise, the insurer offered a lump sum against the claimed amount, and only then did Rahul come to know that Third Party Insurance comes with a compensation limit as well. But it’s better late than never!

This could have been you. So, to avoid any more rude awakenings, let’s have a look at various slabs of third-party compensation.

Compensation for Injuries Wreaked by the Accident:

Third Party compensation is payable up to the medical expense and treatment in case of minor injuries in an accident. The victim will be compensated the legal liabilities after the court announces its verdict.

Compensation for partial disability caused by the accident:

The compensation amount can be huge in case the accident  leads to partial disability. Thanks to Third-Party Insurance, the insured doesn’t need to bear all the expenses on his own. The medical expenses or hospitalisation costs will be compensated by the insurer if the victim filed liability charges against the policyholder.

Compensation for permanent disability caused by the accident:

In case the accident leads to permanent non-functioning of organs or disability of a body part, say, loss of vision or a limb, the third party insurance becomes a financial crutch for the victim. It reimburses all the incurred expenses during treatment of the victim, including the medical expenses and hospitalisation costs while the insured remains free of this liability.

Compensation for death caused by the accident:

In severe cases like death, a serious monetary threat is involved which may burn a hole in one’s pocket. But if the vehicle at fault is insured with a third party insurance, the financial threat can be resisted to a large extent. If the legal heir of the victim files a case against the vehicle owner, the liability expenses will be paid by the insurance company.

Compensation for damage to property by accident:

In case the accident results in any property damage to a third party, the insurance company recompenses and settles the expense incurred in the repair of damages.

However, the compensation amount may vary insurer to insurer. Mostly, the settlement amount always includes the medical and hospitalisation expenses in case of bodily injury or partial disability. On the other hand, the compensation amount is slightly higher in case of permanent disability or death. It is decided based on the losses suffered due to someone’s demise or disability instigated by the accident.

In case third-party property damage is caused by the insured vehicle, a maximum compensation of up to 7.5 lakh can be filed. If the court decides any amount above that slab, the remaining amount will be paid by the policyholder. To begin with, the third party needs to lodge an FIR against the insured vehicle owner and produce the insured’s valid insurance proof before Motor Accident Claims Tribunal and follow the judgement.

Final Word!

No one wants to experience a situation where he/she requires to claim car insurance. But as uncertainties can come all of a sudden, it is better to be prepared beforehand. By understanding the essentials of third party insurance, you can face the odds with a better mindset. Chances of death or bodily injuries are high in India, owing to the pathetic road condition and driving skills. The chances of property damage in this act are even higher. But thanks to insurance experts, we have third-party insurance which can help us in this regard. Also, as per the motor law, plying a vehicle without valid insurance is an offence and is subject to punishment. However, to enjoy complete benefits, you should know the nitty-gritty of Third-Party Insurance to ensure that you don't face a rude surprise at the time of claiming your insurance.

Written By: PolicyBazaar - Updated: 26 June 2021
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