Third Party Car Insurance

Posted in: Insurance | on: August 10, 2020

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Third-party liability car insurance provides coverage for all the legal liability to a third party caused by the insured. Third-party insurance policy includes losses due to damages or injury caused to a third-party. As per the Indian Motor Vehicles Act, a third-party liability is must and it is a basic need under a vehicle insurance policy. One has to pay fine, if they do not have a third-party insurance. Third-party insurance policy will save a person if they make a damage to any third-party person, vehicle or property.

For example, if you have accidentally damaged the back light of other's car, the third-party car insurance will take care of the losses incurred to the third-party.

It is also known as an 'act only' cover and it is a legal cover needed for car drivers.

What are all covered under Third Party Insurance Policy?

Third-party insurance includes the following coverage as mentioned below:

Third party insurance legal liability:

The legal responsibility of the cover is unlimited in the event of the death of a third-party or major/ minor injury or partial or total disabilities caused to them. If they die, the death compensation will be offered to them as per the Motor Accident Claims Tribunal. The remuneration paid to the victim's family depends on the various factors determined by the insurer.

Property Damage:

If an accident causes any damages to someone's property such as vehicle, public property, house etc. then the damage cost for the losses made to the property are equalized by the third-party insurance cover.

According to the IRDAI rules, the third-party property damages includes coverage up to a sum of Rs.7.5 lakh. There are even some lesser premium plans available. It includes all expenses or personal damages made to a third-party including physical injuries or even death.

Damages to other people's vehicle:

It covers damages made to the third-party vehicle, non-moving vehicle, house or property.

Personal Accident cover:

Personal Accidental Cover protects yourself from losses like physical injuries that are caused by an accident.

The insurer offers 100% payoff on the death of a third-party and 50% settlement in the case of partial blindness or loss of a limb. The payment amount is set as per the court law.

Other coverages:

Some of the other coverages under this plan are:

Financial and Legal Assistance:

A third-party insurance policy may cover the insured in the case of accidents. This policy offers coverage associated with the recovery of the loss of a third-party.

Cost-Effectiveness:

The premium amount will be given based on the model and engine capacity of the vehicle. The premiums of a third-party insurance policy are lesser when compared to a comprehensive car insurance policy.

What are the exclusions in Third Party Car Insurance?

  • Third-party insurance covers up all the damages or losses occurred to the third-party and the insurer take care of all the responsibilities of the third-party liabilities. However, any damages made to his/her own car, damages caused due to drunk & drive or if one's car or belongings are stolen or destroyed, coverage to the vehicle or the belongings in the vehicle in the case of an accident, drivers having no valid license are not covered under this plan.
  • Accidental loss, property damage, liability borne or loss happened outside the limit of a particular geographical area are also not covered under this scheme.
  • The vehicle driven by some other persons other than the actual owner or appointed driver will not be covered under this plan.
  • Damages caused by the radioactive contamination or nuclear weapons either directly or indirectly are not covered.
  • If the car has been involved in speed testing, organized racing and other related incidents, then it does not involve in the coverage.
  • The liabilities which are caused by war, invasion and other such violence will not be covered.

How to buy Third Party Insurance Policy?

  • One can avail the insurance by visiting the insurance company or its website.
  • The companies have web portals which offer proper insurance plans to the owners.
  • One can simply log in, browse insurance plans and can select the best method according to their requirements.

How Third Party Insurance Premium is calculated?

The premium for the third-party insurance was estimated based on the schedule of rates provided by the Tariff Advisory Committee of the insurance regulator. The return given to the victim is decided by the earning capacity of the accident victim.

The premium for the third-party car insurance will be estimated based on the premium rates, engine capacity of the car, the premium for personal accident, owner/ driver cover and the goods and service tax which is 18%.

Total Third-party premium = The basic TP Premium + Personal Accident Owner Driver + GST 18%.

According to the IRDAI rules, the premium rates for the third-party insurance for each financial year will vary accordingly.

How to claim Third-Party Insurance in the case of death or injury?

  • One must file an FIR with the police instantly, once the accident occurs and should take a copy of the FIR document.
  • Get the third-party motor insurance information of the car owner.
  • Take a copy of the charge sheet filed by the police against the car owner.
  • Enroll a motor claims lawyer and file a remuneration claim case in the Motor Accident Claims Tribunal in the area where they live.
  • In most of the cases, the car owner would recommend an out-of-court settlement, where mutually agreeable cost is settled on. Though this process is permissible, it is better to take authorities involved in the case of an accident.

How to claim Third Party Insurance in the case of property damage?

  • Property damage includes all the damages met by the driver's vehicle and their personal property, including the house.
  • In such cases, they have to file an FIR and get a copy of the documents including the copy of the charge sheet filed by the police against the offender.
  • The claim has to be filed in the local tribunal court. The repayment amount will be awarded or rejected after considering and examining the submitted documents along with the verification of matters from both sides.
  • The maximum amount of payment is limited up to Rs. 7.5 lakhs in the case of property damages.

Accidents can happen unexpectedly and it will end up on heavy loss on finances. Before selecting a good plan, one must go through the plans available and should proceed with the best plan which suits them. It is mandatory for an individual to own third-party insurance. So one must have third-party accidental coverage which is beneficial for them in the case of emergencies.


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