Third Party Insurance

Third-party insurance also referred to as liability insurance essentially provides financial coverage to an insured person against any liability incurred in case of any loss/damage caused to third-party property or the person. Under the Motor Vehicles Act, 1988, possessing third-party insurance is a legal mandate.

As per the Motor Vehicles Act, 1988, Third Party Insurance is a statutory requirement. Under this policy, the prime beneficiary of the policy is neither the original insured nor the insurance company, but a pretentious third party. As per the rules, the Insurance Regulatory and Development Authority (IRDA) of India compute the damages.

Why 3rd Party motor insurance Policy

Why Do You Need Third Party Insurance?

Besides the legal clause, Third Party Insurance comes in handy when your vehicle hits another vehicle. You can’t measure the level of damage caused by an accident - it might lead to death as well. In such instances, the victim is allowed to register a case claiming for compensation. Here third party insurance comes into the picture. It covers the insured vehicle in case any liability claim arises out of bodily injury, property damage, or death of the third party. As per the guidelines of IRDA, while there is no limit in case of death, the property damage cover is limited up to Rs. 7.5 lakh in case of car insurance and Rs.1 lakh in case of two wheeler insurance. It is better sticking to third party liability insurance if you own a vehicle that is more than 5 years old.

How does Third Party Insurance Works?

As stated earlier, Third Party Insurance is liability insurance that works towards easing out the legal liabilities of the first party for causing damages to the third party. The first party refers to the insured who is responsible for the losses/ damages caused to the third party, who is the person filing liability claims against the insured. The second party or the insurance company aids the financial burden of the insured by paying the legal liabilities towards the third party.

Insurance companies cover two kinds of motor Third Party Insurance claims – bodily injury liability and property damage liability.

Third party bodily injury liability claim arises out of the insured causing physical injuries to another person with his vehicle. Such claims provide coverage for hospitalization expenses, pain & suffering, loss of income as well as death or permanent disability as a result of the accident.

Third party property damage liability claim covers the property damage or complete loss of property caused by the insured vehicle. It includes claims related to damaged landscapes, such as a ruined fence, front lawn, etc. damaged property such as mailboxes, the fence gates, etc. as well as replacement of loss of structures, such as shops.

Key Benefits & Importance of Third-Party Insurance:

Offers Legal Cover and Financial Assistance:

The legal liability of the insured person is covered under the third party insurance policy in the case of disability or demise of the third party, and any damage or loss to the property of the third party. The third-party liability policy takes care of the financial and legal burden on the insured. Despite the fact that the direct beneficiary is neither the insurance company nor the insurer, but a third party, this is the most crucial benefit that a third party insurance ensures for the owner or the driver of the insured vehicle.

Easy, Seamless and Fast ­Process to Acquire the Third Party Insurance:

The third party liability insurance can be bought and access easily. You can also renew this policy online by visiting the official website and by following the instructions online.

Cost-effective Policy

The coverage offered under third party liability insurance appears exceptionally cost-effective and rewarding in terms of its cost and premium rate. Even if you have to use this as either an essential or an add-on part of the main policy, it benefits you fully. However, at the time of calculating the compensation amount, insured’s annual income is considered.

Features of Third-Party Car Insurance:

The following is taken care of by the standard third party car insurance in case of the accident caused by your vehicle results in:

  • Death or bodily injury to a third party
  • Damage to third party property
  • Compulsory personal accidental cover for owner/driver up to Rs. 15 lakh (only in case the personal accident component is included in the policy)

The following salient features are a part and parcel of third party insurance plan:

  • The policy holder, the insured or the injured third party are the beneficiaries of the third party liability insurance. These beneficiaries are only the nominal beneficiary of the third party car insurance. In practise, the money is directly paid to the third party or his solicitor by the insurance company.
  • Injuries to the insured himself are not covered under third party car insurance. It covers the injuries caused by the insured to the rest of the world.
  • In these plans, third party car insurance premiums do not differ with the insured vehicle’s value as it is the 'legal liability' and it is impossible to know beforehand what that liability would be.
  • Third party car insurance involves lawyers’ help.
  • With an option to renew or buy third party insurance online, the process is easy, quick, and seamless and entirely depend on your time and convenience.

Types of Third Party Insurance

Third party motor insurance can be categorized into two parts:

  • Third Party Liability Car Insurance
  • Third Party Liability Two-wheeler Insurance

Third Party Liability Car Insurance:

Third Party Car Insurance is a risk cover, under which the insurer compensates any legal liabilities claimed by the third party involved in an accident, where the insured vehicle is at fault. As per the Motor Vehicles Act 1988, Section 146, plying an uninsured vehicle on Indian roads is an offence. This is why liability insurance is also known as ‘Act Only’ plan. However, the scope of cover doesn’t include damage or loss of the insured vehicle.

Third-Party Liability Two Wheeler Insurance:

Third Party Bike Insurance in India is mandatory by law for all the registered vehicles that are plying on the roads. This rule applies for two-wheelers as well. Non-compliance may lead to the enforcement of legal punishment, which includes hefty fines, and trial under the laws of road safety under the Motor Vehicles Act. So, owing to the risk associated with this type of vehicles (bikes), insuring it with an adequate plan is an ideal decision to keep the stress at a bay.

Third Party Liability Insurance for Private Vehicle covers

Policy Coverage

Third Party Liability Insurance for Private Vehicle covers:

  • Damage to the property of the third party
  • Bodily injury or death of the third party
  • Permanent Total Disability of the driver/owner of the insured vehicle (depends on the insurer)
  • Accidental death of the driver/owner of the insured vehicle

Third Party Liability Insurance for Commercial Vehicle covers

Policy Coverage

Third Party Liability Insurance for Commercial Vehicle covers:

  • The policy covers your legal liability for the injury or damage caused by you to the third party.
  • Demise or any bodily injury to the third party
  • Property damage caused to the third party up to Rs. 7.5 lakh (car)/1 lakh (bike)

Step-wise Process of Claiming Third Party Insurance

Step 1- Application:

The victim or the legal envoy of the departed can make an application against the owner of the vehicle for a third-party liability compensation.

Step 2- Lodge an FIR

Once the application is completed, file an FIR with the police, furnishing the required details. You must have a copy of the FIR and the original records of the expenses incurred by the victim.

Step 3- Approach the Motor Accidents Claims Tribunal.

After filling the First Information Report (FIR) successfully, the next step is to register the case with Motor Accidents Claims Tribunal

Step 4- Get the Cover Amount

There is no pre-decided limit for claiming third party insurance. The insurer compensates the full amount decided by the court in its final verdict. However, IRDA limits the cover for property damage up to 7.5 lakh.

NOTE: The police complaint must have the following information:

  • Driver’s Licence Number
  • Witnesses’ name and contact details (if any)

Comprehensive V/s Third Party Liability Car Insurance

When you meet with a road accident, whom do you blame?

Do you blame yourself, the careless driver or the roads filled with potholes, or hard luck? Nobody takes the charge or no one wants to pay out-of-the-pocket. That's where a comprehensive & third party car insurance policy comes to your rescue and acts as a Savior!

When you already accept the importance of owning car insurance, the next question that immediately comes to your mind is, "What kind of car insurance should I choose?"

Let us help you!

Car insurance can be classified into two types: Third-party Car Insurance and Comprehensive Car Insurance.

As you already know, Third-party car insurance protects you from any liability claimed by a third party due to injury or property damage in an accident. Without this cover, you are not allowed to ply your vehicle on roads. Comprehensive car insurance is quite extensive in nature. It safeguards your vehicle from natural and man-made calamities. Any damage to your car due to vandalism, earthquake, flood, storm, strike, riot, terrorist attack, or theft etc. will be taken care of by this plan. While third party insurance only covers third party liability, Comprehensive insurance covers the insured for own damage as well as third party liability. That’s the reason, mostly the experts recommend this insurance plan to ensure optimum protection. Here are the benefits for which, the comprehensive plan appears more appealing:

Third Party Liability Insurance Comprehensive Car Insurance
The insurance premium is less Offers a wide range of coverage but comes with considerably high premium
Covers bodily injury and accidental death caused to the third party Covers accidental damages to the insured/insured vehicle and third-party liability as well
Covers property damage caused to the third party Covers damages owing to man-made and natural calamities
In case the value of your vehicle is low, it's worth taking third party car insurance This cover is beneficial for luxury or expensive cars that offers protection against all damages
Only liability coverage is offered Compensates the insured for more than vehicular collision

Recent Updates on Third Party Insurance

As per the recent guidelines from IRDA, all general insurers are instructed to offer long-term third party insurance for new vehicles. As per this, all insurers to offer three-year third party insurance for cars and five-year third party insurance for two wheelers. However, this will slightly impact on the premiums to be paid in the near future.

Third-Party Insurance Premium Rates with effect from June, 16 2019:

S. No. Category Description of Vehicle Class Premiums w.e.f. June 16, 2019 (in Rs.)
1   Third-Party Insurance Premium For Private Cars*  
    Less than 1000 CC 2,072.00
    More than 1000CC but less than 1500CC 3,221.00
    More than 1500CC 7,890.00
2   Third-Party Insurance Premium For Two Wheelers  
    Less than 75CC 482.00
    More than 75CC but less than 150CC 752.00
    More than 150CC but less than 350CC 1,193.00
    More than 350CC 2,323.00
3 A1 Public Carrier Vehicles that Carry Goods (other than 3-wheelers)  
    GVW less than 7500 Kgs 15,746.00
    More than 7500 Kgs but less than 12000 Kgs 26,935.00
    More than 12000 Kgs but less than 20000 Kgs 33,418.00
    More than 20000 Kgs but less than 40000 Kgs 43,037.00
    More than 40000 Kgs 41,561.00
4 A2 Private Carrier Vehicles that Carry Goods (other than 3-wheelers)  
    GVW less than 7500 Kgs 8,438.00
    More than 7500 Kgs but less than 12000Kgs 17,204.00
    More than 12000 Kgs but less than 20000 Kgs 10,876.00
    More than 20000 Kgs but less than 40000 Kgs 17,476.00
    More than 40000 Kgs 24,825.00
5 A3 Public Carriers Vehicles Carrying Motorised 3-wheelers and Motorised Pedal Cycles  
    Other than E-carts 4,092.00
    E-Carts 2,859.00
6 A4 Private Carriers Vehicles Carrying Motorised 3-wheelers and Motorised Pedal Cycles  
    Other than E-carts 3,914.00
    E-carts 3,204.00
7 B Trailers  
    Agricultural Tractors up to 6 HP 857.00
    Vehicles that include Special and Miscellaneous Type of Vehicles (Class-C) 2,341.00
8 D Special Types of Vehicles  
    (i) Agricultural Tractors controlled by Pedestrian with 6 HP, Plane Loaders and Hearses 1,550.00
    (ii) Other Special and miscellaneous types of vehicles 6,847.00
9 E Motor Trade (Road Transit Risks)  
    (i) Distance not more that 2400 kms 1,055.00
    (ii) Distance more than 2400 kms 1,268.00
10 F Motor Trade (Road Risks) (Excludes Motorised 2-wheelers) (Trade Certificate or Named Driver)  
    1st Name certificate or driver 1,345.00
    For additional certificates/drivers up to 5 (per certificate/driver) 651.00
    For additional certificates/drivers more than 5 but less than 10 (per certificate/driver) 419.00
    For additional certificates/drivers more than 10 but less than 15 (per certificate/driver) 363.00
11 F Motor Trade (Road Risks) (Motorised 2-wheelers) (Trade Certificate or Named Driver)  
    1st Name certificate or driver 515.00
    For each additional certificate/driver 257.00
12 C1a 4-wheelers used to carry passengers for reward or hire with a capacity of maximum 6 passengers Basic TP Premium (A) Premium (per licensed passenger) (B)#
    Less than 1000CC 5,769.00 1,110.00
    More than 1000CC but less than 1500CC 7,584.00 934.00
    More than 1500CC 10,051.00 1,067.00
13 C1b 3-wheeler used to carry passengers for reward or hire with a capacity of maximum 6 passengers  
    E-rickshaw 2,595.00 1,241.00
    Vehicles other than E-rickshaw 1,685.00 806.00
14 C2 Vehicles with 4 or more wheels used to carry passengers with a capacity of maximum 6 passengers for hire or reward
    School Buses 13,874 848
    Other Buses 14,494 886
15 C3 Motorised 3-wheeler passenger vehicles used to carry passengers for reward or hire with a capacity of more than 6 passengers but less than 17 passengers 6,913.00 1,379.00
16 C2 3-wheeler passenger vehicle used to carry passengers for reward or hire with a capacity of more than 17 passengers 15,845.00 969.00
17 C4 Motorised 2-wheelers used to carry passengers for reward and hire   
    Not more than 75CC 861.00 580.00
    More than 75CC but less than 150CC 861.00 580.00
    More than 150CC but less than 350CC 861.00 580.00
    More than 350CC 2,254.00 580.00
*Vintage Cars: A discount of 25% shall be permitted for private cars under the Vintage Cars segment that is certified as Vintage Cars by Vintage and Classic Car Club of India as the erstwhile IMT.
# TP Premium is the total of the Basic TP Premium (A) along with an amount derived by the multiplication of the Licensed carrying capacity by the amount in (B)

Third Party Insurance: Exclusions

Like, in the basic motor insurance plan, the standard third party insurance is not applicable to certain situations. The following is a list of a few such situations:

  • Accidental damage/liability/loss outside any particular geographical boundary
  • Claims arising out of contractual liability
  • If any individual, other than the owner or the designated driver was driving the vehicle.
  • If the third party sustains accidental loss or damage, which has accrued from any substantial loss.
  • Liability, caused by a nuclear weapon or radioactive contamination, directly or indirectly.
  • Any damage, loss and/or liability caused due to invasion, war or any other warlike operations.
  • Claim arising when the policy is inactive or if the driver is not carrying a valid driving license at the time of the accident

The details in the list above are the most common exceptions; you must check your documents of the policy for a comprehensive list of exclusions.

Compare Third Party Insurance Online and Save More!

Once you’ve decided on the plan, the next step is to compare third party motor insurance online. Online comparison helps you get the best deals that meet your requirements. You can compare the plans on the parameters like benefits, features, coverage, claim settlement process, premium etc. We, at Policybazaar.com, help you compare these plans in the blink of an eye. You just need to visit our official website, fill in the relevant information and compare third party car insurance plans or two wheeler insurance from a relatively large number of insurers. Once you find a plan that suits your budget and requirements, then you can proceed to purchase it directly from our website. This way, with an adequate Third Party Insurance, ride your passion into the sunset with gusto!

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Written By: PolicyBazaar - Updated: 22 May 2020
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