Third Party Insurance

Third-Party Insurance Premium Rates

As per the recent guidelines from IRDA, all general insurers are instructed to offer long-term third party insurance to the car owners. As a result, there is a slight impact on the premiums to be paid.

Third-Party car insurance premium rates with effect from June 1st, 2022:

Third Party Premium Rates for Electric Car

Features of Third-Party Car Insurance

• The main feature of third-party car insurance is that it provides compensation for damages caused to a third-party by the insured vehicle
• Third party insurance comes at a very nominal premium
• It is the most basic and mandatory insurance cover that a policyholder can buy
• It covers the legal and financial liabilities that the policyholder might have to bear in case of accidental involvement.
• The insurer pays off for accidental injuries, loss of life, and 3rd party property damages
• Personal Accident Cover for the owner/driver of the car is also offered under this insurance

Why do you Need Third-Party Insurance?

A car owner needs third-party insurance since it saves him/her from legal liabilities, accidental liabilities, or property damage of third party resulting due to an unfortunate event. In addition to this the policyholder does not have to worry about paying off for medical expenses that the third party has incurred due to accidental injuries or death.

While there is no coverage limit in case of death, 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 highly recommended to get third-party liability insurance if the insured vehicle is more than 5 years old.

Key Benefits of Third-Party Insurance

While driving on the roads, the risk of accident is always there. During that time a third-party insurance offers the right protection to the policyholder in the following manner:

1. Offers Financial Assistance:

   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.

2. Covers 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.

3. 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.

4. 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.

5. Ensures Peace of Mind

   Liability only policy helps a vehicle owner to drive in peace since help would be provided by the insured during a road mishap.

What is Covered Under Third-Party Insurance?

Third-party car insurance covers the liabilities arising due to third-party accidental damage, injury or death. Mentioned below are the inclusions of 3rd party car insurance in detail:

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

   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 for car 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.

Comprehensive V/s Third Party Liability Car Insurance

To understand the differences between third party and comprehensive car insurance better, go through the table given below:

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

The compensation limit is not pre decided . The insurer compensates the full amount decided by the court of law. 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)

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