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All You Need to Know About Third Party Car Insurance

Unaware of the essentials linked to Third Party Motor Liability Insurance? Here’s a quick ‘dekho’ of what’s covered, not covered and most relevantly how to claim on the third party liability insurance.

Third Party Liability Insurance protects you against any legal liability arising due to the involvement of your own car in an accident that led to death, injury or sizeable property damage to a third party. Hence, it offers peace of mind shielding you against any unforeseen incidents involving your own car.

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Synopsis of Third Party Liability Insurance

Usually, third party liability insurance is an element of the main car insurance policy. As it may be noted, several insurers might also offer this as a separate cover. This proves in the favour of money conscious consumers as the cost of a standalone third party cover is always lesser than the comprehensive cover. As it is mandatory in India, third party insurance is a crucial requirement when car owners hunt for car insurance covers. With the advancement in the e-commerce sector, buying or renewing the third party insurance cover online is the newest update in the insurance domain.

As per the Indian Motor Vehicles Act (1988), third party liability cover is a constitutional obligation. As it suggests, the primary beneficiary of this cover isn’t the insurance company or the policy holder, but an engaged third party. In an unfortunate event of permanent disability or death of the third party triggered by your own car, this policy will cover for any financial obligation sustained by you. The compensation paid to the victim is decided on the various factors including the earning capacity of the latter.

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In-Depth Coverage

Third Party legal liability: While the legal liability of the cover in case of death or injury to the third party is unlimited, the compensation to the victim is decided by the Motor Tribunal on the basis of various factors including and not limiting to the earning capacity of the victim.

Property Damage: As per IRDA norms, third party property damages are covered up to a sum of Rs.750,000. However, insured has option to restrict this coverage up to Rs.6000. Opting for a lesser coverage will lower the premiums involved.

Personal Accident Cover for Owner or Driver: In an accident, the death or the bodily injury sustained by the owner-driver of the vehicle, it is covered by the third party insurance policy as below:

Nature of Injury Scale of Compensation
Death 100%
Loss of two limbs or sight of two eyes or one limb or sight of one eye 100%
Loss of one limb or sight of one eye 50%
Permanent total disablement from injuries other than named above 100%

Note: The above cover is subject to:

  • The owner-driver is the registered owner of the vehicle insured therein

  • The owner-driver is the insured named in the policy

  • The owner-driver holds an effective driving license, in accordance with the provisions of Rule 3 of the Central Motor Vehicle Rules 1989, at the time of accident.

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Premium Rate: How Much Does It Cost?

IRDA has standardized the car insurance premium rates for third party liability insurance with effect from 1st April, 2015 as below:

Private cars Premium in Rupees
Not exceeding 1000 cc Rs. 1,468
Exceeding 1000 cc but not exceeding 1500 cc Rs.1,598
Exceeding 1500 cc Rs. 4,931
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Exclusions: Keep an eye for what’s not covered

As in case of the main car insurance policy, there are certain exclusions where the third party insurance cover does not apply. Mentioned below are a few of these conditions:

  1. Accidental loss/damage/liability borne outside the specified geographical area.

  2. Claims that arise out of any contractual liability.

  3. The usage of the car that is not in line with the commonly stipulated ‘Limitations as to Use’.

  4. The vehicle was being driven by someone who isn’t the owner or designated driver.

  5. Accidental loss/damage incurred by the third party that has resulted from any consequential loss.

  6. Liability, directly or indirectly caused by radioactive contamination or nuclear weapons.

  7. Loss, damage and/or liability caused by war, invasion and other warlike operations.

The above list features the most common exclusions. For an exhaustive listing, refer your car insurance documents.

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Claims Settlement: Modus Operandi

As per the Motor Vehicles Act (1988), all disputes related to third party liability insurance cover should be settled in the Motor Accident Claims Tribunal at the location of the accident. In case you are the victim of the accident and wish to claim on the third party insurance, below are the first few steps you need to take:

  • You must obtain the insurance details from the owner/driver of the vehicle involved.

  • File the First Information Report of the accident with the local police station.

Basis the above information, the affected person can then file for the compensation in the MACT (Motor Accident Claims Tribunal) at the location of the accident or where the affected person lives.

Note: The Tribunal, basis the evidences and subsequent testimonials presented in the case, will finally arrive at the judgment. The owner-driver or the policy-holder will be summoned along with any witnesses, if required, for the final arbitration.

Be cautious, as the process requires coordination between different parties involved, it can take as long as six months for the ruling of the verdict.

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The Finale Word

In this era of frenzied hurry, merciless steam of traffic and a frantic need to drive too fast, on-road accidents and succeeding damages is an eternal issue. By capitalizing on a total protection plan for your precious set of wheels, you can continue to enjoy that much deserved peace of mind while on road. With a suitable third party motor liability insurance policy, as a part of the comprehensive package or stand-alone, not a soul can stop you from driving away with delight and passion.

Citations: Insurance Regulatory and Development Authority (IRDA) Guidelines

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Frequently Asked Questions

Being a good driver, do I still need to buy a third-party motor insurance?

Yes. As per the Indian Motor Vehicles Act, 1988 mandate, third-party motor insurance is a mandatory component of your motor insurance. Even if you are good driver, you may end up in an accident due to no fault of your own. Keeping this scenario in mind, you will be happier knowing that the offending driver is insured with the third-party motor insurance allowing you to raise a claim for your losses.

What is the maximum compensation offered by a third-party motor insurance policy?

When it comes to bodily injuries or death, there is no specific amount set for the compensation amount. However, in the case of third-party property damage, the insurance companies would be accountable for a maximum amount of Rs.7.5 lakhs.

If I had an accident and I need to raise a claim on the third-party insurance policy, how much time do I have to do so?

You have a span of about 60 days from the date of the accident to file a case with the Motor Accidents Case Tribunal. However, the earlier the better.

What documents are required to raise a third party car insurance claim?

In order to raise third-party car insurance claim it is advised to have the following documents readily available.

  • Copy of the FIR (First Information Report) as registered by local police station
  • Documented proof relating to the expenses being claimed
  • Report from the surveyor if damage to property is involved