Third Party Insurance

Third-party insurance is an insurance policy that covers third-party liabilities only. According to the Motor Vehicles Act of 1988, third-party insurance is a mandatory cover for Indian car owners as it provides coverage for damage to a third party's vehicle, property, physical injury, disability or death.

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What is Third Party Insurance?

Third-party insurance is the basic insurance coverage that is compulsory for every four-wheeler. It provides coverage against any property damages, physical injuries or death of third parties if the car owner is at fault. For example, bumping the insured car with another car on the road.

It covers third-party liabilities arising out of

  • Property damages
  • Damages to the vehicle
  • Disability
  • Bodily injuries, and
  • Death of the 3rd party

Features of Third-Party Car Insurance

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

  • The policyholder and the injured third party are the beneficiaries of the third-party liability insurance.  In practice, the money is directly paid to the third party or his solicitor by the insurance company.
  • Injuries to the car owner are not covered under third-party car insurance unless the personal accident cover for the owner-driver has been opted. It covers the injuries caused by the insured car to the rest of the world.
  • In these plans, third-party car insurance premiums do not consider the insured vehicle’s value as it is a 'legal liability and it is impossible to know beforehand what that liability would be.
  • Third-party car insurance involves lawyers’ help in deciding the amount of compensation to be given under death or disability of third person
  • With an option to renew or buy third-party car insurance online, the process has become easy, quick, and seamless. It entirely depends on the time and convenience of the car owner.
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Why Do You Need Third Party Insurance?

Besides the legal clause, third-party insurance comes in handy when the insured vehicle hits another vehicle. Nobody can measure the level of damage caused by an accident - it may lead to death as well. In such instances, the victim is allowed to register a case claiming compensation. Here, third-party car insurance comes into the picture. It covers the insured vehicle in case any liability claim arises for causing bodily injury, property damage, or death of the third party.

As per the guidelines of IRDAI, while there is no coverage limit in case of death, the property damage coverage is limited up to Rs 7.5 lakh in the case of car insurance. The compensation offered in case of third person liabilities depends on age, income, profession and status of the third person. It is better to stick to third-party liability insurance if the insured vehicle is more than 5 years old.

How Does Third Party Insurance Work?

As stated earlier, third-party car insurance is liability insurance that works towards easing out the legal liabilities of the first party for causing damages or injuries to the third party. The first party refers to the vehicle owner who is responsible for the injuries/damages caused to the third party. The third party is the person filing liability claims against the first party. The second party or the insurance company aids the financial burden of the vehicle owner by paying the legal liabilities towards the third-party. Insurance companies cover two kinds of  third party insurance claims – bodily injury, death/disability liability and property damage liability.

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Key Benefits & Importance of Third-Party Insurance

Third-party insurance comes with its own set of advantages. To know why third party cover is important for a vehicle, take a look at some of the benefits and advantages of buying a third party insurance policy:

  • Offers Legal Cover and Financial Assistance:

    Legal liabilities can be financially draining and can lead to bankruptcy if the vehicle owner is 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 the policyholder with the required financial assistance and helps him/her to pay off the third-party liabilities without exhausting all the savings.

  • Covers Third Party Legal Liabilities

    As the name suggests, third-party insurance covers all third-party legal liabilities of the policyholder if he/ she causes accidental damages or injuries 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. 

  • Fulfils Legal Mandate

    As per the Motor Vehicles Act of India, 1988, it is legally mandatory for all vehicle owners in India to at least own a third-party insurance cover to be able to use their vehicles on public roads.

  • 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 it has to be used as either an essential or an add-on part of the main policy, it benefits the vehicle owner fully. However, at the time of calculating the compensation amount, the vehicle owner’s annual income is considered.

  • Ensures Peace of Mind

    Third-party liability insurance helps a vehicle owner to drive in peace and without any worries. This is possible because he/she doesn’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.


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List of Third Party Car Insurance Providers

Car Insurance Companies in India Incurred Claim Ratio
(2020-2021)
Personal Accident Cover for Owner-Driver
Bajaj Allianz Car Insurance 68.06% Covered
Bharti AXA Car Insurance 64.27% Not Covered
Cholamandalam MS Car Insurance 74.30% Not Covered
Digit Car Insurance 74.91% Not Covered
Edelweiss Car Insurance  93.38% Covered
Future Generali Car Insurance 66.13% Covered
IFFCO Tokio Car Insurance 84.04% Covered
Kotak Mahindra Car Insurance 74.64% Covered
Liberty Car Insurance 59.91% Covered
National Car Insurance 78.55% Not Covered
New India Assurance Car Insurance 78.20% Covered
Oriental Car Insurance 81.83% Covered
Raheja QBE Car Insurance 100.51% Covered
Reliance General Car Insurance 76.89% Covered
Royal Sundaram Car Insurance 87.89% Covered
SBI Car Insurance 86.10% Available as an optional cover
Shriram Car Insurance 79.43% Covered
Tata AIG Car Insurance 75.41% Covered
United India Car Insurance 96.45% Covered
Universal Sompo Car Insurance 87.96% Covered
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Disclaimer : *Policybazaar Insurance Brokers Private Limited does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

What is Covered Under Third-Party Insurance?

Third-party car insurance covers the liabilities arising due to third-party accidental damage, injury or death. The policy compensates for the Third-party liabilities which can be up to Rs 7.5 lakh in case of property damage. There is no exact limit for death claim as it is based on the verdict by the Motor Tribunal Court. Mentioned below are the inclusions of third party car insurance

1. Third-Party Liabilities

Third-party liabilities result  from any damages or injuries 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 someone, unfortunately, rams his/her car in a third party person’s property, such as the boundary wall or a shop, the third party insurance policy will pay for the loss or damages caused to that person. The motor insurer will cover your damage liability up to the limit of Rs 7.5 lakh.
  • Car Damages - If a car owner accidentally hits a third party’s car with his/her own car while driving, the insurance policy will come to the rescue and pay for the damages caused to that third-party’s car on the policyholder’s behalf.
  • Accidental Bodily Injuries -In case the victim suffers from a disability as a result of the accident, the compensation amount that needs to be paid will be decided by the Motor Accidents Claims Tribunal. But only 50% of the compensation amount is paid by the insurer in case the victim suffers from lost limb or partial blindness.
  • Accidental Death - If the car owner accidentally runs over his/her car on someone or causes fatal injuries to a third party person leading to his/ her untimely death, or disability the motor insurance provider will pay compensation to the victim’s family on the policyholder’s behalf.

2. Personal Accident Cover

A few motor insurance companies also offer personal accident cover to the owner-driver of the insured car under third-party car insurance. As part of this cover, the owner-driver of the car is granted compensation in case he/ she ends up suffering from a disability or dies as a result of the car accident. 

In case of the death of the policyholder, the compensation is paid to the nominee appointed by the car owner. The compulsory personal accident cover for the owner-driver is available for up to Rs15 lakh.

What is Not Covered Under a Third Party Insurance?

Like in the basic motor insurance plan, the standard third-party insurance is not applicable to certain situations. The following coverage is not provided under a third party car insurance policy:

  • Own Damages - It does not cover any damages sustained by the insured car, be it accidental damages, fire damages, damages due to natural & manmade calamities, or theft.
  • Drunk Driving - It does not cover any third-party liabilities if the car was being driven under the influence of alcohol or drugs.
  • Invalid License - It does not cover any third-party injuries or damages if the driver of the insured car has an invalid driving license.
  • Outside Geographical Limit - If the insured car causes third-party damages or injuries outside the geographical limit as specified in the car insurance policy, it will not be covered.
  • Unauthorized Usage - A third party liability insurance does not cover any third-party injuries or damages caused while using the insured car for illegal activities, racing, commercial purposes, etc.
  • Contractual Liability - It does not cover any claims arising out of contractual liability.
  • Undesignated Driver - If any individual, other than the owner of the car or the designated driver was driving the vehicle, the resultant damages or injuries to the third party are not covered.
  • Substantial Loss - Third party insurance does not cover any accidental loss or damage sustained by the third party, which has accrued from any substantial loss.
  • Nuclear Perils - It does not include any liability caused by a nuclear weapon or radioactive contamination directly or indirectly.
  • War - This insurance policy does not cover any damage, loss, and/or liability caused to the third party due to invasion, war, or any other war-like operations.

The details in the list above are the most common exceptions; make sure to check the documents of the policy for a comprehensive list of exclusions.

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Coverage of Third Party Liability Insurance for Commercial Vehicle

Third-party liability insurance for commercial vehicles covers:

  • The policy covers the legal liability of the vehicle owner for any injury or damage caused by the insured vehicle to the third party
  • Demise or any bodily injury to the third party
  • Property damage caused to the third party for up to Rs 7.5 lakh

How to Claim Third Party Insurance?

Step 1- Application

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

Step 2- Lodge an FIR

Once the application is completed, file an FIR with the police, furnishing the required details. He/she 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 coverage for property damage to up to Rs 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

Third-party car insurance is different from comprehensive car insurance on the basis of its coverage. Third party car insurance financially protects the car owner from any third party claims arising out of death or bodily injuries or damages to that person’s property in an accident. Besides, this insurance is legally mandatory to ply a car on public roads.

Comprehensive car insurance, on the other hand, is quite extensive in nature. It safeguards the insured vehicle from natural and man-made calamities. Any damage to the insured car due to vandalism, earthquake, flood, storm, strike, riot, terrorist attack, or theft etc. will be taken care of under 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 the car.


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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 a 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 the 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 policyholder 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.

Third-Party Insurance Premium Rates

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.

Third-Party Insurance Premium Rates with effect from June 1st, 2022:

S. No. Category Description of Vehicle Class Premiums w.e.f. June 1st, 2022 (in Rs)
1   Third-Party Insurance Premium For Private Cars (Single Year)*  
    Less than 1000 CC 2,094.00
    More than 1000 CC but less than 1500 CC 3,416.00
    More than 1500 CC 7,897.00
Third-Party Insurance Premium For Private Cars (Three-year)
Less than 1000 CC 6,521
More than 1000 CC but less than 1500 CC 10,640
More than 1500 CC 24,596
Private Car Electric Vehicle (Single Year)
Not Exceeding 30 KW 1,780
Exceeding 30 KW but not exceeding 65 KW 2,904
Exceeding 65 KW 6,712
Private Car Electric Vehicle (Long Term)
Not Exceeding 30 KW 5,543
Exceeding 30 KW but not exceeding 65 KW 9,044
Exceeding 65 KW 20,907
2 A1 Public Carrier Vehicles that Carry Goods (other than 3-wheelers)  
    GVW less than 7500 Kg 16,049 
    More than 7500 Kg but less than 12,000 Kg 27,186  
    More than 12,000 Kg but less than 20,000 Kg 35,313
    More than 20,000 Kg but less than 40,000 Kg 43,950 
    More than 40,000 Kg 44,242 
3 A2 Private Carrier Vehicles that Carry Goods (other than 3-wheelers)  
    GVW less than 7500 Kg 16,049 
    More than 7500 Kg but less than 12,000 Kg 27,186  
    More than 12,000 Kg but less than 20,000 Kg 35,313
    More than 20,000 Kg but less than 40,000 Kg 43,950 
    More than 40,000 Kg 44,242 
4 A3 Public Carriers Vehicles Carrying Motorised 3-wheelers and Motorised Pedal Cycles  
    Other than E-carts 4,492
    E-Carts 2,859.00
5 A4 Private Carriers Vehicles Carrying Motorised 3-wheelers and Motorised Pedal Cycles  
    Other than E-carts 3,922
    E-carts 3,204.00
6 B Trailers  
    Agricultural Tractors up to 6 HP 910
    Vehicles that include Special and Miscellaneous Type of Vehicles (Class-C) 2,485 
7 D Special Types of Vehicles  
    (i) Agricultural Tractors controlled by Pedestrian with 6 HP, Plane Loaders and Hearses 1,645 
    (ii) Other Special and miscellaneous types of vehicles 7,267 
8 E Motor Trade (Road Transit Risks)  
    (i) Distance not more that 2400 km 1,175
    (ii) Distance more than 2400 km 1,412 
9 F Motor Trade (Road Risks) (Excludes Motorised 2-wheelers) (Trade Certificate or Named Driver)  
    1st Name certificate or driver 1,498 
    For additional certificates/drivers up to 5 (per certificate/driver) 725 
    For additional certificates/drivers more than 5 but less than 10 (per certificate/driver) 467 
    For additional certificates/drivers more than 10 but less than 15 (per certificate/driver) 404 
10 C1a 4-wheelers used to carry passengers for reward or hire with a capacity of a maximum of 6 passengers Basic TP Premium (A) Premium (per licensed passenger) (B)#
    Less than 1000 CC 6,040.00 1,162
    More than 1000 CC but less than 1500 CC 7,940  978
    More than 1500 CC 10,523 1,117
11 C1b 3-wheeler used to carry passengers for reward or hire with a capacity of a maximum of 6 passengers  
    E-rickshaw 1,648  789 
    Vehicles other than E-rickshaw 2,539  1,214 
12 C2 Vehicles with 4 or more wheels used to carry passengers with a capacity of a maximum of 6 passengers for hire or reward
    School Buses 13,729 839
    Other Buses 14,343 877
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 6,763  1,349 
14 C2 3-wheeler passenger vehicle used to carry passengers for reward or hire with a capacity of more than 17 passengers 15,502 948

*Vintage Cars: A discount of 50% 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)

Compare Third Party Insurance Online and Save More!

Once the car owner has decided on the plan, the next step is to compare third-party car insurance online. The online comparison will help to get the best deals that meet his/her insurance requirements. He/she can compare the plans on the parameters like benefits, features, coverage, claim settlement process, premium, etc.

We, at Policybazaar Insurance Brokers Private Limited, help car owners to compare these plans in the blink of an eye. The vehicle owners just need to visit our official website, i.e. Policybazaar.com, fill in the relevant information and compare third-party car insurance plans from a relatively large number of insurers. Once they find a plan that suits their budget and requirements, then they can proceed to purchase it directly from our website. This way, with adequate third-party insurance, ride your passion into the sunset with gusto!


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Third-Party Insurance FAQs

News

  • Third-Party Premium Rate Increases 16 June Onwards

    The third-party insurance premium rates are to be increased from June 16 onwards. The general insurance As per the general insurance providers, the premium rates have to be revised in order to make the segment sustainable. The increase in the premium rates of third-party insurance is to be disclosed by the Insurance Regulatory and Development Authority of India (IRDAI) every year. Due to the ongoing pandemic, it could not be possible to change the premium rates FY2020.

    Motor premium insurance has been facing a bit of traction. As per the insurance providers, there has been a decrease in motor claims in the initial months of lockdown but now as the traffic has increased it has started coming back to normal. As per the industry records, the third-party insurance premium rates increased by 4.4% to Rs. 10,650 Crore in the year 2020-2021 as compared to 2019-2020 when it was Rs. 10,198 Crore. However, in the last fiscal the overall downfall in the premium rates was 1.68% to Rs. 67,790 Crore.

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Third Party Liability Insurance Reviews & Ratings
4.8 / 5 (Based on 311 Reviews)
(Showing Newest 10 reviews)
Radhika
Delhi, July 05, 2022
Faster claims
The team settled my third party claim very fast and I did not have to pay anything from my pocket. Great work Policybazaar!
Babhulkar
Kota, July 04, 2022
Third party damages covered
Called Policybazaar as soon as my car met with an accident. They helped me with all my claim related queries, and got my third party claim settled in really less time. Didn't have to pay anything from my pocket. Great experience!
Hamendra
Gorakhpur, July 03, 2022
Happy with my purchase
Really happy with my purchase at Policybazaar. Bought a third party insurance plan after comparing quotes at Policybazaar. So far, it has been a smooth experience.
Maanraj
Chhpara, July 02, 2022
All in one place
Bought a bundled third party and own damage plan. Wanted to check the validity of my insurance, and could find all the details about all my policies at one place in my Policybazaar account. You really don't need to switch between tabs as everything is available in your account only
Baasim
Sultanpur, July 01, 2022
Kudos to the team
The sales team at Policybazaar is very helpul in solving all our problems. Was confused between two third party plans and one of the sales person helped me in choosing the right one for my vehicle. Great work!
Rachit
Ranchi, June 30, 2022
Saved on my premium
Saved a lot on my third party insurance premium as I compared insurance rates on Policybazaar website before purchasing one. Really helpful!
Maanya
Prayagraj, June 29, 2022
Amazing claim assistance
Love the 24*7 claim assistance service by the Policybazaar team. Met with a third party accident while I was driving at midnight, the folks at Policybazaar quickly catered to my request and helped me in quick claim settlement even at late hours.
Hanisha
Bhilwara, June 28, 2022
Quick renewal
Always happy with the renewal process at Policybazaar. Its so quick and easy, I have been using this platform since a while now. Renewed my third party insurance and the sales team was super fast and helpful in clearing my doubts.
Ekant
Nanded, June 27, 2022
Economical quotes
My car is few years old now so I wanted an economical third party insurance since I was paying a lot in premiums during last few years. Came to know about Policybazaar and got some really economical quotes for my car. Swift service!
Rachana
Cuttack, June 26, 2022
No middleman involved
Purchased my third party insurance directly from Policybazaar without any middleman. Got a plan at a very less cost than what I was getting with an involvement of an agent.
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