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

Third party insurance, compulsory under the Indian Motor Vehicles Act, is important as it protects you from basic third party liability

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

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?

Basic third party liability is 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 and one cannot ply a vehicle on Indian roads without this insurance.

What does third party insurance cover?

  • Third party liability insurance covers 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

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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 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, only third party liability premium is less than Rs. 1000, 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 insurers and premium will be more or less the same irrespective of the insurer you choose.

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

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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 this, read the car insurance terms and conditions carefully. 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 the 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 an 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.

Related: All You Need to Know About Zero Depreciation Car Insurance

What does this teach us?

Firstly, if you don’t read the car insurance terms and conditions 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 Insurance 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 a 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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