Third Party Insurance

Posted on Feb, 2020
Third Party Insurance
Four things are a prerequisite for motorists if they wish to drive on Indian roads – their driving license, their vehicle registration documents (RC book), their PUC certificate and their insurance policy. Yes, you are permitted to drive on Indian roads only if you can present all four documents mentioned above. In accordance with the Motor Vehicle Act of 1988, all vehicle owners are required by law, to own at least a third party insurance. Here's a detailed guide on this mandatory insurance policy.

What is third party insurance?

Third party insurance, also known as limited liability coverage, is mandatory as per Vehicle Motor Act of 1988. This is the kind of insurance plan that is specially designed to pay for the costs associated with accidents caused by the policyholder, in which a third party may be injured or hospitalised, and if their vehicle or property is damaged. Such a policy protects the policyholder from any legal and financial liabilities arising out of an accident that causes injury, physical disabilities or death of the third party. Note that this policy does not cover the policyholder for the cost of hospitalisation or vehicle damage – it only protects their legal and financial interests .

Coverage offered under a third party insurance policy

Now that we know third party insurance meaning let’s find out the kind of coverage offered by insurance providers under this insurance policy. This policy covers the third party against:
  • Any injuries endured due to an accident caused by the first party (policyholder)
  • Any disabilities (partial or permanent) due to an accident caused by the policyholder
  • The accidental death of the third party as a result of the accident
  • Any damages endured by the third party’s vehicle due to the accident caused by the policyholder
  • Any losses suffered by the third party’s property due to the accident caused by the policyholder

What are the exclusions in a third party policy?

Third party insurance doesn’t cover the following:
  • The cost of damages endured by your own vehicle due to an accident caused by you
  • The cost of losses incurred, in case your own vehicle is damaged or destroyed (in an accident or otherwise) or if it is stolen
  • Coverage for injuries suffered by you in accidents
  • Any pay-out for replacing your vehicle or vehicle parts in case your vehicle is written off

Buying third party insurance for your car

Purchasing an insurance policy is rather easy today. You can purchase insurance from your insurance broker or an agent. Today, you can even buy third party car insurance online from the website of your preferred insurance provider. Buying insurance online enables you to compare the various policies and choose one based on your requirements. While you receive an instant soft-copy of the policy on e-mail, the insurance provider also mails the hard copy to you. Moreover, you don't have to pay any brokerage fees or charges to your insurance agent, which enables you to save some money.

Conclusion: Driving without a valid insurance policy is a punishable offence. If you fail to produce your license, RC book, PUC certificate and insurance policy upon a traffic authority’s request, you could be penalised. You could be charged a heavy fine or even be served a jail sentence or both. As such, you must ensure that you always have the valid documents, including your third-party insurance or comprehensive insurance policy.