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 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 arises. 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.

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 3rd 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 3rd 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 3rd 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 3rd 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 3rd party car 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 Car Insurance
• Third Party Two-wheeler Insurance

Third Party 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 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

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

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)

Inclusions of 3rd Party Insurance

A third party car insurance policy provides coverage against the following risks:

Third Party Liabilities

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:

• Property Damages - In case you, unfortunately, ram your car in a third party person’s property, such as the boundary wall or a shop, your 3rd party insurance policy will pay for the loss or damages sustained by that person.
• Car Damages - If you accidentally hit a third party person’s car with your own while driving, your insurance policy will come to your rescue and pay for the damages caused to that person’s car on your behalf.
• Accidental Bodily Injuries - In case you accidentally hit a third party person with your car, your third party insurer will pay for the treatment of his bodily injuries.
• Accidental Death - If you accidentally run over your car on someone or cause fatal injuries to a third party person leading to his untimely death, your motor insurance provider will pay compensation to the victim’s family on your behalf.

Personal Accident Cover

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 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.

Advantages of Third Party Insurance

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 3rd party insurance policy:

• Fulfils Legal Mandate

  As per the Motor Vehicles Act of India, 1986 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 3rd party insurance for your car, you abide by the laws of the country and avoid earning a challan or fine for its violation.

• Covers Third Party Legal Liabilities

  As the name suggests, third party insurance covers all third party legal liabilities of the policyholder if he 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.

• Provides Financial Assistance

  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.

• More Affordable

  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 3rd 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.

• Ensures Peace of Mind

  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 protection from any unforeseen third party liabilities. Thus, third party insurance ensures peace of mind of the car owner and allows him to enjoy driving his car.

• Easy to Purchase

  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.

Disadvantages of Third Party Insurance

Third party insurance does come with certain disadvantages. Take a look at them below:

• No Coverage for Damages to Own Car

  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 3rd party insurance.

• No Protection from Theft/Fire

  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.

• No Add-On Covers

  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 3rd party insurance cover.

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 & 3rd 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 is of two types: Third-Party Insurance and Comprehensive Car Insurance.

Third party car insurance online protects you from any 3rd party insurance claims arising out of death or bodily injury or damages to that person’s property in an accident. Third party insurance is legally mandatory to ply your car 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:

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 3rd 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:

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 3rd Party Insurance, ride your passion into the sunset with gusto!