Summary/ TL;DR
Third-party car insurance is mandatory in India. It protects vehicle owners from financial liabilities arising from death, injury, or property damage caused to a third party. While compensation for third-party injury or death has no upper limit, property damage claims are capped at ₹7.5 lakh, as per IRDAI regulations. It ensures legal compliance and financial protection.
Introduction
Road accidents can happen when you least expect them. In such situations, the financial consequences can be as overwhelming as the physical and emotional stress involved. If your vehicle causes injury, death, or property damage to another person, you may be legally required to compensate the affected party.
This is where third-party car insurance becomes crucial. In addition to being a legal mandate, it protects you from financial liabilities arising from damage or injury caused to a third party. Before you make a purchase, it is important to understand the compensation limits under third-party liability motor insurance.
What is Third-Party Car Insurance?
A third-party car insurance policy provides coverage for the damages/injuries caused to a third party by the insured vehicle. According to the Motor Vehicle Act, 1988, it is legally mandatory for every vehicle owner to have third-party motor insurance to drive on public roads legally.
Read More:What is Third Party Insurance: Coverage, Benefits & How It Works
What is Covered in Third-Party Car Insurance?
This policy offers coverage only for third-party liabilities. It does not cover damages to the insured vehicle. Typically, a third-party car insurance covers the financial liabilities resulting from:
- Injury or death of a third party
- Legal liabilities arising from accidents
- Damages to third-party property.
What is Not Covered in Third-Party Car Insurance?
In addition to learning about the coverage and benefits of third-party car insurance, you must also understand its exclusions, such as:
- Anydamages caused to the insured vehicle due to a road accident are not covered under this type of insurance policy.
- Death or bodily injuries to any person other than the third party are not covered.
- Damages arising out of an accident caused by a driver who isintoxicated or unlicensed is not covered.
- Damages caused by a driver with a learner’s licence, but driving without an unsupervised driver, are not covered.
How Does Third-Party Car Insurance Work?
Here’s how third-party car insurance works:
- Anaccident occurs where the insured vehicle leads to injury, death, or property damage to another person.
- The injured person or affected property owner files an FIR(first information report) at the nearest police station. The policyholder shouldinform the insurance provider at the earliest.
- Thepolicyholder files a claim for compensation with the respectivecar insurance company. In case a crime takes place, it would have to be registered with the Motor Accidents Claims Tribunal.
- The insurance company sends asurvey officer to evaluate the incident, determine responsibility, and calculate compensation.
- If the insured driver is found liable, theinsurance company pays the compensation amount as per the policy coverage limits.
How to File a Third-Party Insurance Claim?
Filing a claim under a third-party car insurance online policy is a simple and hassle-free process with Generali Central. Here’s how a claim is filed:
1. File a Claim
You must file a claim for compensation with the insurance company.
2. Complete Documentation
Submit all the relevant documents, such as the claim form, policy documents, a copy of the FIR filed by the third party, etc.
3. Wait for Claim Verification
The insurance company will assess the damages and decide the compensation.
4. Compensation
If your claim is verified, then the insurance company releases the compensation amount that is to be paid to the third party.
Read More: How to Claim Under Third Party Car Insurance
Understanding Compensation Limits in Third-Party Car Insurance in India
Know that when you file a claim for compensation under third-party insurance in India, there are certain limits beyond which the insurer does not offer compensation, and the remaining amount is to be paid from the policyholder’s pocket.
Here’s what you need to know about compensation limits under third-party car insurance:1
1. Compensation in Case of Third-Party Injury or Death
There is no upper limit on compensation in cases involving third-party injury or death. The amount is determined by the Motor Accident Claims Tribunal (MACT), and the insurance company is responsible for paying the compensation on behalf of the policyholder, regardless of the amount.
Note: Under the ‘Liability Only Section’, the policyholder has the option to limit third-party property damage cover to ₹6,000, which reduces the liability-only premium.
2. Compensation in Case of Third-Party Property Damage
In case of third-party property damage, the Insurance Regulatory and Development Authority of India (IRDAI) has set a compensation limit of ₹7.5 lakh. If the damage exceeds this amount or if the policy conditions are violated, the vehicle owner may be personally liable for the remaining amount.
Read More:Is Third Party Insurance Mandatory in India
What are the Benefits of Third-Party Car Insurance?
Purchasing a third-partycar insurance policy is equivalent to building financial and legal protection. Here’s why you must not skip securing your vehicle with a third-party car insurance plan:
1. Legal Mandate
This type of car insurance policy is legally mandatory in India. Failure to purchase third-party car insurance can lead to hefty fines and penalties.
2. Financial Protection
Road accidents can turn into substantial compensation claims within minutes, and without a third-party insurance policy, you end up paying the amount out of your own pocket. This type of insurance plan is the ultimate financial protection you need as a vehicle owner.
3. Affordable Policy Premium
Since these policies provide protection only against third-party damages, the policy premium is standardised by the IRDAI and is affordable.
4. Peace of Mind
Having third-party car insurance provides reassurance that you are financially and legally protected if an accident occurs. This reduces the stress associated with potential liabilities and allows you to drive with ease, knowing that unexpected expenses arising from third-party damages are covered.
Summing Up
A third-party car insurance policy not only safeguards the vehicle owner from large financial and legal liabilities but also ensures that victims (third-party) are compensated for damages, injuries, or loss of life. Although property damage claims have an upper cap, compensation for third parties in case of an injury or death is unlimited.
If you’re looking for a reliable car insurance policy that comes with extensive coverage at an affordable premium, you need to look no further thanGenerali Central.
Expert Note
This information is based on standard motor insurance guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) and commonly followed industry practices. Policy coverage and conditions may vary by insurer.
FAQs
- Yes, Section 161 of the Motor Vehicles Act acknowledges hit-and-run as cases where the identity of the vehicle responsible for an accident cannot be established despite reasonable efforts. To offer financial support, in case of death, the victim’s family receives ₹25,000, while ₹12,500 is paid for grievous injuries. To raise such a claim, the victim/ their representative can raise a request through an application to the Claim Enquiry Officer in their Taluka.
- Yes, third-party motor insurance is a legal mandate. Not having the cover will bring a fine of ₹2,000 for the first offence, and ₹4,000 in case of a repetition.
- Typically, the following documents are needed:
- Insurance policy papers
- Copy of FIR
- RC
- Driver’s Licence
- Duly filled claim form.
