What Happens If You Only Have Third Party Insurance During a Major Accident?

14 Aug 2026

If you only have third-party insurance and are in a major accident, the insurance will compensate for liabilities caused to the third party- damage to the property, death or injury. For your own vehicle, no expenses will be provided by the insurance company. Third party insurance is mandatory as per the Motor Vehicles Act of 1988.

What Happens If You Only Have Third Party Insurance During a Major Accident | Generali Central

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Introduction

The Motor Vehicles Act of 1988 mandates that every car owner in India have a third party car insurance. It's the most basic vehicle insurance policy you can own. If you accidentally damage third-party property or cause injury in an accident, the policy will cover it.

Purchase a third party car insurance online to safeguard your vehicle. The insurer will bear the cost of damage, protecting you from paying a hefty amount. However, if you only have a third-party insurance policy and your vehicle has been damaged, you'll have to bear the costs on your own.

What Happens in a Major Accident With Only Third Party Insurance?

If you are involved in a major accident and have only third party insurance, your insurer will cover the liabilities of the damage caused to others and not you.

Here's what happens:

1. The insurer will compensate the third party for death, injury and permanent disability.

2. If the injury is serious or fatal, the matter may be referred to the Motor Accident Claims Tribunal (MACT).

3. MACT awards the compensation under the provisions of the Motor Vehicles Act, 1988.

4. The insurer will handle your legal representation and settlement.

As for you:

1. No medical expenses will be covered.

2. Damage to your vehicle isn't covered.

Hence, you'll have to bear all these costs out of your pocket despite having third party car insurance.

Read more about car insurance on What is Third-party Car Insurance?

What is Covered by Third Party Insurance?

The third party insurance covers the following:

1. Compensation for death, medical expenses arising due to permanent disability or bodily injury. (Note: No upper limit for the death or bodily injury claims according to the regulatory norms)

2. Compensation for legal defence costs, tribunal representation and court proceedings. (Note: Insurer will manage the settlement process and legal formalities)

3. Damage to another vehicle, public or private property. (Note: Maximum cap of ₹7.5 lakhs)

What Are the Limitations of Third Party Insurance?

Here's what the third party car insurance doesn't cover:

1. Damage to your own vehicle.

2. Medical expenses for your own injuries.

3. No Claim Bonus benefits.

4. Different add-on covers such as Return to Invoice, Engine Protection or Zero Depreciation.

For more information on add-ons, read the blog Add-on Covers in Car Insurance - Complete Guide.

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What Are the Compensation Limits as Per IRDAI?

The Insurance Regulatory and Development Authority of India governs compensation limits for third-party car insurance. The limits are as follows:

Bodily Injury or Death

1. No upper limit for compensation.

2. The Motor Accident Claims Tribunal (MACT) determines the amount based on disability percentage, dependency and impact on livelihood. It can also run to several lakhs or crores.

Property Damage

1. The maximum compensation limit is up to ₹7.5 lakhs, as per regulatory norms.

2. It covers damages to another vehicle, building and public property.

What is the Claim Process for Third Party Car Insurance?

The Motor Accident Claims Tribunal (MACT) often considers third-party claims under the Motor Vehicles Act, 1988. A legal process settles it.

1. As the policyholder, you must inform your car insurance company immediately and even lodge an FIR at the nearest police station.

2. Submit copies of the driving licence, RC book, FIR and Insurance policy.

3. The victim or their family members may file a claim with the Motor Accident Claims Tribunal (MACT).

4. MACT will issue a notice to the vehicle owner, the insurance company, and the driver. The insurer will assign a legal representative to defend the case.

5. The tribunal will take into consideration the extent of injury or loss, the negligence, and the quantum of compensation. All the documents are reviewed thoroughly.

6. The tribunal will determine the compensation and pass the judgment under the provisions of the Motor Vehicles Act, 1988.

7. The insurer will deposit the amount with MACT. The tribunal will disburse the amount to the claimant.

Key things to note:

1. This process applies only to third-party loss.

2. The insurer handles the legal defence costs.

3. Depending on the case's complexity, settlement can take several months or years.

As third party insurance is mandatory, read more about it in the blog Is Third Party Insurance Mandatory in India?

What if you want to switch from third party insurance to comprehensive insurance?

Yes, you can upgrade from third party insurance to comprehensive insurance during renewal. The vehicle insurance company may allow you to switch to a plan offering broader coverage. You can check the details for third party car insurance online.

In case you were driving without a valid licence at the time of the accident, will the insurer provide compensation?

If you were driving without a valid driving licence during the time of the accident, the insurer will have to compensate for damage to the third party as per legal mandate. However, since this constitutes a policy breach, the insurer may recover the amount paid. This can lead to significant financial distress despite having a third party insurance policy.

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.

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FAQs

1. Do I compulsorily need EP in car insurance?

No, you are not compelled to get EP along with your comprehensive car insurance plan. However, if you have a new or expensive car, it is highly recommended.

2. Is the EP add-on cover worth the extra cost?

Yes, the additional expense is worth it. In the case of an emergency, you will end up spending a lot more if you don't have EP. Hence, getting this add-on proves to be economically viable ind long run.

3. Can I add this rider during renewal?

Yes, you can add the EP rider when you renew your car insurance plan. You can also get it when you buy a fresh motor insurance policy.

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What Happens If You Only Have Third Party Insurance During a Major Accident?

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Introduction

What Happens in a Major Accident With Only Third Party Insurance?

What is Covered by Third Party Insurance?

What Are the Limitations of Third Party Insurance?

What Are the Compensation Limits as Per IRDAI?

Bodily Injury or Death

Property Damage

What is the Claim Process for Third Party Car Insurance?

What if you want to switch from third party insurance to comprehensive insurance?

Expert Note

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FAQs

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