In India, it is mandatory to have car insurance by law. However, there are many options to purchase; among them, a comprehensive policy covers your own damage. On the other hand, third-party insurance covers legal liabilities arising due to an accident caused by your vehicle.
Car insurance is a legal requirement in India. While comprehensive car insurance offers broad protection, third-party insurance covers legal liabilities arising due to accident-related scenarios. It is the only basic mandatory plan for every car owner to buy.
So, What is third-party insurance? How does it work? What does it cover and not cover? Let’s unravel this mystery!
What Is Third-Party Liability Car Insurance?
Third-party liability insurance means coverage against legal liabilities that may arise due to an accident caused by your car that leads to third-party losses.
The term 'third party' refers to someone other than the two parties involved in the insurance contract, i.e. you (the policyholder) and your insurance provider.
Key Features of Third-Party Liability Car Insurance
You just know the third-party liability insurance, meaning let's move on to the key features of it.
· It is mandatory by law for all vehicles.
· New cars must be taken for three years at the time of purchase. For old cars, it can be taken annually.
· IRDAI fixes premium rates and is the same across insurers.
· The premium depends on the car's cubic capacity and usage type (private or commercial).
· Discounts are available for vintage and hybrid cars.
What Does Third-Party Car Insurance Cover?
So, what does third-party insurance cover? Let's suppose your insured car is involved in an accident and causes damage or injury to a third party, such as:
· Another vehicle
· Property
· Individuals
Your third-party liability policy will cover the financial losses the third party bears due to the damages.
Simply put, third-party insurance covers the policyholder against legal claims of compensation that may arise from third parties who suffer loss in an accident involving your car.
What is Not Covered Under Third Party Insurance?
While third-party liability policies provide coverage against accident liabilities, there are many exclusions, i.e. losses not covered, such as:
· Damage to your own car due to an accident or any other peril
· Injuries or death of occupants in your car
· Theft of accessories or components
· Any loss due to driving without a valid license, under the influence of alcohol, etc.
Thus, from the above points, it is clear that third-party liability car insurance only fulfils the legal requirement but does not provide comprehensive coverage.
Benefits of Having a Third-Party Liability Cover
There are many benefits of third-party insurance. Here are some of them.
· Covers Accident Liabilities: It takes care of third-party losses that may run into lakhs and for which you can be held legally liable. This provides substantial financial protection.
· Affordable Premium: TP premium is significantly cheaper than comprehensive insurance, making it lighter on the pocket.
· Legally Compliant: A valid TP policy ensures your car is legally compliant, avoiding fines and penalties.
· Hassle-free Claims: Cashless claims and fast settlement ensures you face no problems during the claim process.
How Does Third-Party Liability Car Insurance Work?
Let's understand how third-party liability insurance works through an example:
· You are the insured policyholder who has taken the car insurance policy (First Party)
· The insurance company is the second party in the contract
· Ramesh is driving on the road when your insured car hits Ramesh's car due to your negligence. Ramesh suffers financial losses due to damage to his vehicle (Third Party)
In the above scenario, your third-party liability cover will compensate Ramesh for the losses/damages caused to his car due to the accident with your insured vehicle.
The compensation will be paid as per your policy terms and coverage amount stated for third-party property damage.
Thus, the third-party liability insurance policy protects you from such claims and pays on your behalf for damages that you may cause to a third party due to an accident.
How to Buy Third-Party Liability Insurance?
Buying a third-party car insurance online for your car is pretty simple. Follow the below steps:
· Scroll and Find the third-party car insurance page
· Enter your car's registration number and other details
· Select a third-party insurance plan
· Choose coverage duration - 1 year or three years
· Enter personal information like name, contact number, address
· Pay premium online using net banking, UPI, wallet, or card
· Policy copy will be emailed instantly
The ease of online car insurance has made buying TP policies extremely convenient today.
We hope this blog post has clarified the question “what is a 3rd party insurance?” and associated questions. Although third-party coverage is a basic, low-cost policy, it is an essential financial safeguard against third-party liability. You can opt for a comprehensive policy with your damage cover for your losses. Speak to a trusted insurance advisor to determine the appropriate level of coverage for your needs.
