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 motor laws of India, third party insurance is compulsory. The policy is termed as a 'third-party' cover as the beneficiary of the car policy is a third party, who is not a part of the insurance contract. Hence, the policy doesn’t extend policy coverage to the insured. As per the contract between the two parties, the insurance company pays for the liability arising out of the insured car. It covers any legal liability of policyholder for causing accidental death/ bodily injury or property damage to a third party, As mentioned above, third party car insurance online does not cover any loss or damages to the insured car due to theft, accident, etc.
As per the rules of the Motor Vehicles Act 1988, the Insurance Regulatory and Development Authority (IRDA) of India computes the third party damages.
Third party insurance is a type of insurance policy that covers only third party liabilities of the insured. It provides financial protection against damages caused to a third party property, vehicle and physical injuries to third parties. Also known as the act-only insurance’, the beneficiary under this insurance is a third party and not the policyholder (first party) or the insurance company (second party).
Third party car insurance is a type of motor insurance policy that financially protects the car owner against third party legal liabilities resulting out of an accident involving the car. It provides coverage against any property damages, physical injuries or death of third parties if the car owner is at fault.
For example, bumping your car with another car on the road. Third party car insurance does not cover own damages of the insured car. While property damages are covered up to Rs 7.5 lakh, bodily injury or death of third parties are covered as per the compensation decided by the Motor Accidents Claims Tribunal.
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.
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. It is better to stick to third party liability insurance if you own a vehicle that is more than 5 years old.
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/ her 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.
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 insured, but a third party, this is the most crucial benefit that third party insurance ensures for the owner or the driver of the insured vehicle.
The third party liability insurance can be bought and accessed easily. You can also renew this policy online by visiting the insurer website or insurance broker website and by following the instructions online.
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, the insured’s annual income is considered.
The standard third party car insurance covers your legal liabilities in case the accident caused by your vehicle results in:
The following salient features are a part and parcel of third party insurance plan:
Take a look at the importance of buying third party car insurance in India:
Take a look at the motor insurance companies in India that offer third party car insurance:
Car Insurance Companies in India |
Personal Accident Cover for Owner-Driver |
Bajaj Allianz General Insurance Co. Ltd. |
Covered |
Bharti AXA General Insurance Company |
Not Covered |
Cholamandalam MS General Insurance Company Ltd. |
Not Covered |
Edelweiss General Insurance Company Limited |
Not Covered |
Future Generali India Insurance Company Ltd. |
Covered |
Go Digit General Insurance Limited |
Covered |
HDFC ERGO General Insurance Company Limited |
Covered |
IFFCO-Tokio General Insurance Company Limited |
Covered |
Kotak Mahindra General Insurance Company Ltd. |
Covered |
Liberty General Insurance Ltd. |
Covered |
National Insurance Company Limited |
Not Covered |
Raheja QBE General Insurance Company Limited |
Covered |
Reliance General Insurance Company Limited |
Covered |
Royal Sundaram General Insurance Co. Limited |
Covered |
SBI General Insurance Company Limited |
Available as an optional cover |
Shriram General Insurance Co. Ltd. |
Covered |
Tata AIG General Insurance Company Limited |
Covered |
The New India Assurance Co. Ltd. |
Covered |
The Oriental Insurance Company Ltd. |
Covered |
United India Insurance Co. Ltd. |
Covered |
Universal Sompo General Insurance Co. Ltd. |
Covered |
A third party car insurance policy provides coverage against the following risks:
Third party liabilities arise out of any loss or damages caused by the insured car to a third party during an accident. Since the accident is caused by the insured car, paying for the damages is the responsibility of the insured car’s owner. Third party liability insurance covers legal liabilities arising out of causing:
A few motor insurance companies also offer personal accident cover to the owner-driver of the insured car. As part of this cover, the owner-driver of the car is granted with compensation in case he/ she ends up suffering from a disability or dies as a result of a car accident. In case of death of the policyholder, the compensation is paid to the nominee appointed by the car owner.
A third party car insurance policy covers the following:
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:
The details in the list above are the most common exceptions; you must check the documents of your policy for a comprehensive list of exclusions.
The following coverage is not provided under a third party car insurance policy:
Third party liability insurance for commercial vehicle covers:
Third party insurance comes with its own set of advantages. To know how is it beneficial to buy third party cover for your car, take a look at some of the advantages of buying a third party insurance policy:
As per the Motor Vehicles Act of India, 1988, it is legally mandatory for all car owners in India to own a third party insurance cover to be able to use their cars on public roads. Thus, if you buy third party insurance for your car, you abide by the laws of the country and avoid earning a challan or fine for its violation.
As the name suggests, third party insurance covers all third party legal liabilities of the policyholder if he/ she causes accidental loss or damages to a third party person. Not only does it pay for the damages caused to someone else’s car or property, but also provides compensation to the third party person in case of injury or death.
Legal liabilities can be financially draining and can lead to bankruptcy if you are unable to pay for the losses or damages caused to a third party person. This is where third party insurance comes into the picture as it provides you with the required financial assistance and helps you pay off your third party liabilities without exhausting all your savings.
Besides third party insurance, car owners also have the option to buy comprehensive car insurance that not only covers third party liabilities but also the damages sustained by the insured car. Since third party insurance provides narrower coverage as compared to a comprehensive car insurance policy, it is more affordable. Thus, you can buy a third party insurance policy at a lesser price than a comprehensive car insurance policy.
Third party liability insurance helps a car owner to drive in peace and without any worries. This is possible because you don’t have to worry about arranging the finances in case of an accident as the policy ensures monetary protection from any unforeseen third party liabilities. Thus, third party insurance provides you with peace of mind and allows you to enjoy driving your car.
Buying third party insurance is extremely easy and a quick process. You can easily buy this insurance cover for your car anytime online, including your home. Besides, the price for third party insurance is fixed by the Insurance Regulatory & Development Authority (IRDA) of India and thus, there is no scope for discrepancies.
Third party insurance does come with certain disadvantages. Take a look at them below:
During a car accident, you don’t have to worry about the legal liabilities arising out of causing bodily injuries or property damages to a third party person. But what about the damages to your own car? Accidents may cause major damages to your car as well which won’t be covered under your third party liability insurance policy. As a result, you will have to pay for the incurred losses or damages to your car on your own in case of third party insurance.
Besides accidents, a car is constantly under the risk of getting stolen or catching fire. In case your car catches fire or gets stolen, your third party insurance policy will be of no use to you as it will not pay for the loss of your car.
A third party insurance policy does not come with a wide range of add-on covers as in the case of a comprehensive insurance policy. Add-on covers help to expand the coverage for your car and can also help to save money in the long run. Zero depreciation cover, conveyance benefit, roadside assistance cover, no claim bonus protection, return to invoice, etc are some of the add-on covers available under comprehensive insurance. Unfortunately, these covers cannot be availed under a third party insurance cover.
The victim or the legal heir of the departed can make an application against the owner of the vehicle for a third-party liability compensation.
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.
After filling the First Information Report (FIR) successfully, the next step is to register the case with Motor Accidents Claims Tribunal.
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 coverage for property damage to up to Rs 7.5 lakh.
NOTE: The police complaint must have the following information:
Third-party car insurance is different from comprehensive car insurance on the basis of its coverage. Third party car insurance financially protects you from any third party claims arising out of death or bodily injury or damages to that person’s property in an accident. Besides, this insurance is legally mandatory to ply your car on public roads.
Comprehensive car insurance, on the other hand, 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 liabilities, comprehensive insurance covers the insured against both own damages as well as third party liabilities. That’s the reason why most experts recommend a comprehensive insurance plan to ensure optimum protection of your car.
To understand the differences between third party and comprehensive car insurance better, go through the table given below:
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 third party property damages and own damages due to man-made and natural calamities, fire, theft, accidents |
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 as both third party liabilities and own damages are covered |
This cover is mandatory under motor laws |
This cover is not mandatory and can be opted as per the car owner’s discretion |
No add-on covers are available |
A wide range of add-on covers can be bought, such as return to invoice cover, nil depreciation cover, etc. |
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 rule, all insurers will offer three-year third party insurance for cars. However, this will slightly impact 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 1000 CC but less than 1500 CC |
3,221.00 |
|
|
|
More than 1500 CC |
7,890.00 |
|
2 |
A1 |
Public Carrier Vehicles that Carry Goods (other than 3-wheelers) |
|
|
|
|
GVW less than 7500 Kg |
15,746.00 |
|
|
|
More than 7500 Kg but less than 12,000 Kg |
26,935.00 |
|
|
|
More than 12,000 Kg but less than 20,000 Kg |
33,418.00 |
|
|
|
More than 20,000 Kg but less than 40,000 Kg |
43,037.00 |
|
|
|
More than 40.000 Kg |
41,561.00 |
|
3 |
A2 |
Private Carrier Vehicles that Carry Goods (other than 3-wheelers) |
|
|
|
|
GVW less than 7500 Kg |
8,438.00 |
|
|
|
More than 7500 Kg but less than 12,000 Kg |
17,204.00 |
|
|
|
More than 12,000 Kg but less than 20,000 Kg |
10,876.00 |
|
|
|
More than 20,000 Kg but less than 40,000 Kg |
17,476.00 |
|
|
|
More than 40,000 Kg |
24,825.00 |
|
4 |
A3 |
Public Carriers Vehicles Carrying Motorised 3-wheelers and Motorised Pedal Cycles |
|
|
|
|
Other than E-carts |
4,092.00 |
|
|
|
E-Carts |
2,859.00 |
|
5 |
A4 |
Private Carriers Vehicles Carrying Motorised 3-wheelers and Motorised Pedal Cycles |
|
|
|
|
Other than E-carts |
3,914.00 |
|
|
|
E-carts |
3,204.00 |
|
6 |
B |
Trailers |
|
|
|
|
Agricultural Tractors up to 6 HP |
857.00 |
|
|
|
Vehicles that include Special and Miscellaneous Type of Vehicles (Class-C) |
2,341.00 |
|
7 |
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 |
|
8 |
E |
Motor Trade (Road Transit Risks) |
|
|
|
|
(i) Distance not more that 2400 km |
1,055.00 |
|
|
|
(ii) Distance more than 2400 km |
1,268.00 |
|
9 |
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 |
|
10 |
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 1000 CC |
5,769.00 |
1,110.00 |
|
|
More than 1000 CC but less than 1500 CC |
7,584.00 |
934.00 |
|
|
More than 1500 CC |
10,051.00 |
1,067.00 |
11 |
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 |
12 |
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 |
13 |
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 |
14 |
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 |
*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) |
Once you’ve decided on the plan, the next step is to compare third party motor insurance online. Online comparison helps you to get the best deals that meet your insurance 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 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 adequate third party insurance, ride your passion into the sunset with gusto!
Apart from these, there are Personal Accident Insurance and other add-on covers such as Zero Depreciation Cover, Road-side Assistance, NCB Protector and so on.