Third party insurance is linked with general insurance, specifically motor insurance.
It is binding as per law for motor insurance policies, however many buyers who are buying it are not conscious of its benefits, coverage or even the claim procedure.
As the term signifies, when somebody other than the two parties involved in the contract (the insured and the insurer) is benefited, the cover is known as a Third Party insurance cover.
Here’s how the Third Party insurance cover functions and how the claims related to it are settled.
Understanding Third Party insurance cover
In general, there are two parts in the motor insurance policy: ‘own damage’ and ‘Third Party’. A third party vehicle insurance is a policyholder’s insurance against damage, disability or death caused to a third party in the course of an accident. According to the Motor Vehicles Act, 1988 it is mandatory for all vehicle owners to run their vehicle on the roads with valid third part insurance cover. The third party insurance cover is sometimes also called as ‘Act Only’ cover, as it acts only on the third person involved in the accident, other than the vehicle owner (first person) and the insurer (second person).
What does Third Party insurance cover?
A third party insurance covers a list of things, of which the most prominent are:
Claims for accidental injury, disability and death:
In event of an accidental mishap that results in injury, disability (partial or permanent) or death, the limit for third party cover has not been fixed. The total compensation is borne by the insurer when the court resolves the case by deciding on the amount.
Other than any sort of bodily injuries, or disabilities to the third person, if the accident results into any sort of damage to the third party’s property, a claim can be filed against the vehicle owner for a third party compensation. As per IRDA norms, Third party property damages are covered up to a sum of Rs.750,000. Insured has option to restrict coverage for Third Party Property damage to Rs.6,000 whereby there will be reduction in “Liability Only” premium.
How claims are settled in a third party insurance:
In case of injury, disability or death:
As per the Motor Vehicles Act, 1988, a motor third party claim must be filed by the affected person in a Motor Accident Claims Tribunal at the location of accident. In case one is a victim of the accident, then he must first obtain the insurance details of the vehicle and file a First Information Report of the accident clearly stating who was in the wrong. Basis FIR and the insurance details, the affected person must then visit the MACT (Motor Accident Claims Tribunal) Court at the same place where the accident took place or where the injured person resides.
In most of the cases the vehicle owner will try to make an out of the court settlement. But, if the accident involves the death of any person, any legal heir of the deceased can file a case under the third party insurance to get sufficient compensation.
Next, the court will summon the vehicle owner or driver of the reported vehicle and the representing lawyers of both parties and reach to a final conclusion.
In case of property damage:
In case a property is damaged by a third party, one can opt for the claim through the Motor Accident Claims Tribunal, by the above said process. Usually the inflictor shall compensate for an out of the court settlement, but if the person suffered feels the compensation offered is less, he can opt to file a case against him.
Third party claims- no fault liability claims or fault liability claims:
Where a no fault liability claim is accident under no negligence, the compensations follow as per the Motor Vehicles Act, 1988. In the other case, if it is proved that the accident was due to a cause of negligence, the court decides a final value of compensation to be evaluated on factors like residual human asset value, loss of earnings for the person or his family by the accident.
Points to remember:
If you ever have claim on a Third Party Liability cover, apart from all other legal procedures, following points should be considered:
- All documentation should be in tact including the FIR
- Timely intimation to the insurance company
Whether you need to claim or no, it’s always advisable to seek necessary information regarding the process. After all, uncertainties come knocking without notice and it’s always in the best interest to be ready to face them. For any further questions you may have regarding the claim process, please contact Coverfox at 1800-209-9930.