Motor Third Party
As per the Motor Vehicles Act, 1988, it is mandatory to buy Third Party Insurance for anybody who owns, buys or drive a motor vehicle. Motor Third Party, which is also known as liability cover is a policy which protects the car owner or driver of the vehicle against any legal liability, accidental liability, financial loss or property damage, medical expense cover in the event of an injury to or even death of any third party arising out of their vehicle.
What is covered under Motor Third Party?
- Death or bodily injury to a third party
- Accidental death of a third-party
- Damage to third party property
- Permanent total disabilities of a third-person
Benefits of Motor Third Party
- Easy and Fast Process: Third party car insurance policies are easy to buy or renew along with being easily accessible. They can also be bought or renewed online, which is a fairly quick and simple process to fulfill when opting for the third party car insurance. Hence, it can easily be availed by anyone as per their time and convenience.
- Cost-Effective and Beneficial: The inclusion of third party vehicle liability insurance component is extremely cost-effective and beneficial in terms of financial costs and premiums. Also, when calculating the compensation, the evaluation is done on the income of the insurer.
- Easy Round the Clock Availability: Unlike other policies that are limited to only the traditional offline method of renewal or application, Third party car insurance policies or renewal of the policy is easily available online round-the-clock, that is, 24×7, 365 days a year from any location
What is Third-Party Insurance?
Third-party insurance is a type of motor insurance that covers any loss or damage caused to another person or their property because of your vehicle. It covers the financial costs of repairing property or the compensation, as decided by the court that needs to be paid in case you have injured a person.
It is important to note that the Motor Vehicles Act has made third-party insurance a mandatory requirement for every vehicle owner. You will be liable for legal repercussions if you don’t possess a valid third-party cover.
Why Do You Need Third Party Insurance?
Third-party insurance covers the damages caused to a third party or their property. Having third-party insurance is mandatory as per the law and hence, driving your vehicle without third-party insurance will be illegal. And, in case you happen to injure a third party or damage their property, your third-party insurance will cover the same.
How Does Third-Party Insurance Work?
If your driving causes any kind of harm to a person or their vehicle, a third-party policy will cover the financial obligations which you will incur.
A third-party insurance policy covers physical injury, death, and property damage.
For instance –
Maneesh holds third-party insurance for his car. He was on his way to work when his car unexpectedly collided with another car. As a result, the driver of the other car died on the spot, and his car faced severe damage too. The third-party insurance will cover the cost of compensating the family members of the deceased person and the repair cost of the car. The amount of compensation shall be decided by the court.
Coverage Under Third-Party Insurance
- Third-Party LiabilitiesA third-party liability arises when you are responsible for causing damages to another person or their property because of your vehicle.The following types of damages are covered –
- Property DamagesIn the event of an accident; third-party insurance covers the damage done to the property of another person. It has a compensation limit of Rs. 7.5 lakhs.Let’s see how the property damage is covered under different scenarios:Example 1:While parking your car, you hit and damage a food stall. You need to pay the owner Rs. 30,000 as compensation. The policy will cover the costs of the same.Example 2:Your car bumps into another car on the road, causing severe damage to the other person’s car. In this instance, the insurance company will cover the repair costs of the other person’s vehicle.
- Accidental Bodily InjuriesThe policy also covers the costs arising from causing permanent disability to another person.For instance, while reversing your car, you accidentally hit a person waiting to catch a bus. The rear-end collision caused severe damage to the victim’s spine resulting in a permanent disability. Your third-party coverage will compensate that person based on the amount declared by the court.
- Accidental DeathSimilarly, in case of accidental death, there is no limit on coverage. When your vehicle hits someone, and they die on the spot due to the impact, your third-party insurance will cover the cost of compensating the family members of the deceased person based on the compensation awarded by the court.
- Personal Accident CoverA personal accident insurance policy is mandatory by law, and you should buy it along with your third-party insurance policy.This policy will cover the costs related to the vehicle owner-driver in the event of accidental death or permanent disability.This add-on cover can be added to thecomprehensive car insurance policies and third-party policies by paying an additional amount of the premium.For instance,Sohail has bought a third-party insurance policy along with a Personal accidental cover add-on of Rs. 15 lakhs for his car. While driving, Sohail meets with an accident. This accident caused several injuries to Sohail and left him permanently disabled. The insurance company will compensate Sohail as per the limit stated in the policy. The other person’s car also faced severe damages and the repair costs amount to Rs. 3 lakh. These damage costs shall be taken care by the third-party insurance cover.
Exclusion Of Third-Party Insurance
Imagine you get into an accident and damage a third party’s car. The owner asks you to pay Rs. 1 Lakh for the damages. You, however, are not worried about the expenses because you have a third-party insurance policy. You think the policy will pay for the damages caused by you. Now, when you apply for the claim, the insurance company tells you…
“This isn’t covered by your policy. You will have to bear the expenses yourself.”
When you hear something like this, you feel betrayed- especially after you have invested in the policy for years. To ensure there are no such surprises at the time of a claim settlement, it is extremely crucial to understand what is not covered under a third-party insurance policy.
Exclusions are situations that your third-party insurance policy doesn’t cover and won’t pay for the expenses.
Now that you’ve understood what ‘exclusions’ are, let’s take a look at the below situations that are excluded under a third-party insurance policy-
- Drink And DriveAny loss caused because the person who is driving the vehicle is under the influence of alcohol is excluded.
- Own DamageIf the insured’s vehicle or the insured himself/ herself has suffered some bodily injury- the policy won’t cover this.For instance, while Rajat is driving his car, he meets with a small accident that damages his car. Since the policy doesn’t cover ‘own damages’, Rajat has to incur the repairing cost for his car himself.
- Out-Of-Warranty Driving LicenceDamages will not be covered if the person driving the insured vehicle doesn’t have a valid driving license.
- Driving Outside The Geographical AreaIf the loss occurred outside the geographical area that is specified in the policy, it will not be covered.
- War And Nuclear WeaponsAny damage caused to the third-party property or individual due to nuclear weapons or war is not covered.
- Consequential LossClaims arising out of consequential damage to the vehicle will not be covered.For instance, your car meets with an accident and requires to be towed to a garage. While towing, the hood of the car gets damaged. The damage to the hood will be considered consequential damage and hence, will not be covered by the policy.
- Unauthorised UsageDamage caused when the vehicle is being used for illegal activities, racing, etc. is not covered.
- Contractual LiabilityClaims arising out of contractual liability, i.e., because the policyholder enters into a contract with someone, are not covered.For instance, Suraj has taken a loan from his relative, Akash. He has pledged his car for a specific time period against this loan. Now, Suraj’s car is damaged while being driven by Akash. Since contractual liability is excluded from third-party insurance, the damages caused to Suraj’s car will not be covered by the policy.
- Undesignated DriverIf an accident takes place but the person driving the vehicle is not the designated driver or owner of the vehicle, then the policy won’t cover the expenses.
Please note, the above list is not exhaustive, there could be additional exclusions in the policy. So, ensure you check the policy wording before you go ahead and make the purchase.
Comprehensive Policy Vs Third-party Only Policy
| Parameters | Comprehensive Policy | Third-party Only Policy |
|---|---|---|
| Definition | Comprehensive policy provides protection against own as well as third-party damages. | A third-party-only policy provides protection against any third-party liabilities only. |
| Coverage | The policy covers any damages caused to the policyholder’s vehicle as well as any damages caused to the third party or their property. | This policy covers damages caused to the third-party individual or their property only. |
| Legally mandated | It is not mandatory to have a comprehensive policy. | It is mandatory to have a third-party insurance policy. |
| Add-ons | You can choose a variety of add-ons with a comprehensive policy. | There are no add-ons available with a third-party-only policy. |
| Premium | Premium is higher as it provides wider coverage. | Premium is lower as it provides a limited cover. |
| Discounts | Discounts are available in the form of no-claim bonuses, voluntary deductibles, anti-theft devices, etc. | No discounts are available. |
How To Buy A Third Party Policy?
To purchase a third-party policy you can visit the website of any insurance company, web aggregator, or broker. These are the steps you will need to follow
- Enter the details of your vehicle such as make and model, registration number, registration date, fuel type, etc.
- Once all the details are entered by you, you will be diverted to the quote page where you can select the type of coverage you are looking for.
- Once you select the third-party option, the premium will be shown.
- After you make the payment, you will receive the policy on your email id.
How To Raise A Claim Under Third-Party Policy?
Raising a comprehensive claim is easy. All you have to do is call your insurer, inform them of the details, and the rest is taken care of by them.
But, it is not the same for third-party insurance as it also involves a legal process. While the steps may vary from insurer to insurer here is a general process that is followed
- Claiming For Property Damage
- Register the claim with the Motor Accident Claims Tribunal office which is situated in the jurisdiction of the place of the accident.
- File a police FIR explaining the details of the accident. (FIR is filed normally by the third party whose property is damaged)
- According to the above filing, compensation will be given to the victim. The maximum compensation is Rs 7,50,000.
- Claiming For Accidental Death/Injury
- Register the claim with the Motor Accident Claims Tribunal office which is situated in the jurisdiction of the place of the accident.
- File a police FIR with the insurance papers of the vehicle. (FIR is filed normally by the third party who is whose property is damaged/who is injured or by their family in case of death)
- According to the above filing, compensation will be given to the victim. The amount will be decided by the Motor Accident claims tribunal.
- The entire closing of the case does not have a time limit
Generally claims that are filed for large property damages, injury, and death can take at least 1 or 2 years to settle. This can be fast-tracked if you have all the documents in place including a proper explanation of the incident recorded in the FIR, original records of expenses, etc.
We are sure that you are now aware of why it is crucial to invest in third-party Insurance. Apart from being a mandatory requirement as per the law, it is also the best way to safeguard yourself financially from unanticipated expenses arising due to third-party liabilities in the event of an accident.
Frequently Asked Questions
1. Will the premium of my TP policy change based on my car model?
The Third Party premium is set by IRDAI based on the cubic capacity of the vehicle. Different models of the vehicle will have different cubic capacities and hence, the premium may vary.
2. If I have a TP policy and do not make any claim, can I get an NCB discount on the next renewal of my TP policy?
No, the No Claim Bonus discount is offered on its own damage premium. In a third-party-only policy, there is no cover available for own damage and so, the discount won’t be applicable.
3. Is it possible to convert my comprehensive policy to a TP policy?
Yes, you can always convert your comprehensive policy to a third-party policy. You can do this while you renew your policy by selecting the Third Party only cover and proceeding with the payment. But, if you need extended coverage then a comprehensive policy will be a better option.
4. Do I need to buy TP car insurance?
Yes, if you own a vehicle, it is a must to have at least a third-party policy. Driving your vehicle without a policy is illegal.
5. Can I claim minor damages on my vehicle if I have a TP policy?
No, you cannot. A third-party policy will only cover the damages caused to the third party or their property. Any damages caused to your vehicle will not be covered under such policy.
6. How much compensation is provided under a TP policy?
While there is no limit to the compensation that will be paid due to injury/death, there is a capping of Rs 7.5 Lakhs for property damage.
7.Is an FIR mandatory for a Third-Party claim?
Yes, it is necessary to file an FIR before filing a third-party claim.
8.Who takes care of Third-Party claims?
All third-party-related claims are dealt with by the Motor Accident Claims Tribunal.