Third Party Motor Insurance – Take another Look Before Investing

Your vehicle may well be the second most valuable asset owned by you. Even if this is not the case, you would surely want to be assured that both you, and this prized possession of yours, are appropriately covered in the face of any unforeseen event like an accident—right?

Third Party Insurance – The Mandatory Cover

Third-party insurance, also referred as a ‘third-party’ cover, is a statutory requirement under the Motor Vehicles Act (MVA) for car insurance in India 1988. Vehicle owners are required to have adequate coverage to ensure that the damages resulting from an accident are paid for in an easy and convenient manner, and those affected are not left running from pillar to post.

A well-conceived third party policy does not provide any benefit to the insured but covers the insured’s legal liability for the death/disability of any kind loss/damage inflicted upon the third-party in the event of a car accident. Since third party insuranc (TPI) cover is mandatory in nature,  all non-life insurance companies are obliged to provide this cover. In India, automobile dealers arrange for a comprehensive insurance cover along with the registration, right at the time of the purchase of the vehicle.

Features of Third Party Car Insurance

Third party car insurance policy insurance covers the following features:

It applies to the reimbursement of cost for physical damages to a structure or another vehicle.

Reimbursement of cost of injury is relevant to the damages incurred by the passengers in the car and the rest of the world. It does not apply to the legal cost claims and medical treatment costs that arise in the event of an accident against the car owner.

It is entirely fault-based. The fault of the insured has to be proved in context to the injuries/ damages, before any compensation can be claimed.

The injured third party is the beneficiary while the insured/policy holder is just a nominal beneficiary of the cover. The money is paid directly by the insurance service provider to the third party and doesn’t pass through the person insured.

Key Benefits of Third Party Insurance for Car in India

Premium calculation for 3rd party insurance is in most cases independent of the overall value of the car. There is no cap on the total compensation figure offered to the third party (injured or damaged).

What does Third Party Insurance not Cover?

 In case of the vehicle being stolen, vandalized or set on fire– you will not receive any compensation. The same would apply if you were to suffer an injury, or if your vehicle sustained substantial damage due to your fault.

Comprehensive Coverage – (also Available Online Car Insurance)

Comprehensive coverage is an integral part of the physical damage portion of your car insuranceThis cover protects you from the damages inflicted on your vehicle, irrespective of whether it is your fault or not.

Coverage under a comprehensive car insurance plan would include:

  • Loss or damage due to flood, earthquake, cyclones, storm;
  • Theft, burglary, acts linked to terrorism/malice, strikes, riots;
  • Accident, fire or theft;
  • Damage in the case of transit by road, rail, watercraft, elevator, etc;
  • Towing charges coming your way after an accident;
  • Explosion, self-ignition, lightning, and so forth.

The cost of comprehensive insurance varies in accordance to your individual details and your insurance provider. The premium amount incurred in this case can prove to be more expensive than third party cover because of the higher level of protection on offer. But then, it is better to be protected than sorry!

Insurance policies do not cover absolutely everything that can go wrong with your car. Safe driving with adequate insurance cover brings peace of mind and makes your journey a pleasure.

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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