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All you need to know about Third Party Liability in car insurance

19 January 2016
Third party insurance is a must have insurance cover for protecting you from third party liability in case of road accidents, and it is also compulsory under the Indian Motor Vehicles Act. A small premium can go a long way in protecting your family and ensuring compliance with the law.
 

When we drive a car, there is a very real risk that due to an accident, there can be a bodily injury or even death of a person either in the car or outside the car. There can even be damage/loss to the property of others. Good news is that you can cover these risks by purchasing something known as “Third Party Liability Car Insurance”.

What is third party liability car insurance?

It is basically a risk cover whereby in case of an unfortunate event, your insurer will compensate you to the extent of your legal liability in such a situation. It is important to note that as per Section 146 of Motor Vehicles Act 1988, third party insurance is mandatory & one cannot ply a vehicle on Indian roads without this insurance.

What does it cover?

  • Death of or bodily injury to any person including occupants carried in the vehicle
  • Damage to property other than property belonging to the Insured or held in trust or in the custody or control of the Insured

Related: Mr Apte, Ms Sharma and Mr Iyer- The Story of Their Car Insurance [Infographic]

How much does it cost?

The good thing about third party car insurance is that it is very cheap. For example, if you go for a comprehensive car insurance for a mid segment car (which covers own damage along with third party liability), it will cost you in the range of Rs. 10,000- Rs.12,000. However, if you buy only a third party liability cover, it will come in less than Rs. 1,000, which is a small fraction of overall cover. Also, since third party cover is mandated by law, you’ll not find a differential pricing between different insures and premium will be more or less the same irrespective of the insurer you choose.

Related: Key factors that determine car insurance in India

Before you purchase a third party car insurance cover, make sure your insurer is registered with the Insurance & Regulatory Authority of India (IRDA).

Related: Comparing car insurance - how to choose the right policy? [Infographic]

Documents needed at the time of claim

In case of third party liability car insurance, you’ll need to first intimate the insurer about the damage by calling on their customer care. Insurer will arrange to tow the vehicle to the nearest garage. For making a claim, you’ll need to submit the following documents to your insurer:

  • A claim form duly signed by the insured
  • Driving license copy
  • Police FIR copy
  • RC copy of the vehicle
  • Company stamp in case of company registered vehicle's original documents
  • Copy of policy document

A word of Caution- and a Case Study

When it comes to buying car insurance, you can never be too careful. You need to know exactly how the policy works and why. For example, take the example of a man named Sivanayaitha Perumal.

On 23 May, 1998, while driving a Mahindra van, Sivanayaitha hit a bicycle rider called Charles, who succumbed to injuries from the accident. Charles’ wife claimed compensation under the part of vehicle’s insurance that covers third parties. The matter went to court which decided that since Sivanayaitha Perumal was driving a Light Motor Vehicle (LMV) as a commercial vehicle, while holding a LMV licence for Non Transport (NT), the insurer was not liable to compensate the deceased’s kin.

As a result, the court made the vehicle’s owner liable to pay the compensation amount to the victim’s family.

What does this teach us?

Firstly, if you don’t read the offer document carefully and adhere to all the rules, you may find yourself in a tough spot.

And secondly, this instance gives you a view of a situation wherein you find yourself without Third Party cover- due to your own negligence. Thus can put a huge financial strain on your family in the short and long term, so make sure such a situation never arises.   

To read more such case studies on car and two wheeler insurance, here’s what you can learn from car insurance case studies in India.

Third party insurance is not only a must have insurance cover for protecting you from financial impact from third party liability, but also mandated under Indian law. Care should be taken to purchase this insurance as soon as possible & do not fail to renew it every year.

 
 
 
 

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