Third-party Insurance: A Brief
The Motor Vehicle Act mandates all car owners to have third-party car insurance to be able to take their vehicles out on Indian roads. Third-party insurance extends protection against third-party liabilities. It includes injury to a third-party person or damage to their property. However, third-party insurance offers no coverage for injuries or damage caused to the policyholder.
Third-party Insurance: How Does It Work?
Suppose your car meets with an accident injuring a third party and/or damaging their property. In such a situation, the insurer will provide financial assistance by paying for the treatment of the third-party person. The policy will also cover the damages caused to third-person property such as their bike or car. This way, the financial burden on the policyholder reduces. To avail of these benefits, the insured should notify the insurance company at once and then file a claim.
Once the claim is filed, the insurer assigns a surveyor to assess the damage and provide an estimate of repair costs. After verifying the claim, the insurer settles it.
Third-party Insurance: Why Is It Important
- The Motor Vehicle Act mandates vehicle owners to purchase third-party cover.
- Even though third-party insurance offers basic coverage, it offers policyholders some relief by extending financial protection against third-party liabilities.
- Third-party motor insurance protects against accidental risks.
Before moving on to how third-party car insurance coverage works, we will discuss the various terminologies. Here are some common terms related to the third-party cover:
- First-party: The person who purchases an insurance plan or policy
- Second-party: The insurance company or insurer that issues the insurance policy
- Third-party: The person raising the claim for damages that the first party is responsible for
If the policyholder meets with an accident wherein a third party is involved, then the policyholder becomes liable to pay for any injuries or damages caused. As soon as the accident occurs, the policyholder should inform the insurance company and provide all accident-related details.
Moreover, the policyholder should provide all the necessary details about the accident to the insurance company. The details include:
- A detailed description of the accident, including the date and time
- Details of insurance policy and policyholder
- Any injuries to the passengers and/or drivers and damages to property and/or vehicles
- Information about witnesses on the accident spot
- Climate conditions at the accident site at the time of the accident
- Photos of the injuries and damages at the accident site
- If the police get involved, you should provide all details of the insurance company and FIR number if any.
In addition, if the policyholder is not responsible for the accident, then the claimant can file a claim. Repair costs, costs of hiring a vehicle, and injury compensation are among expenses that can be claimed as per the motor insurance policy under third-party insurance plans.
Third-party Insurance: Various Features
- A third-party car insurance policy provides basic protection to all policyholders
- These plans are also known as the “act-only” or “liability-only” policies
- It protects the policyholder against any legal liability to third parties that may emerge due to the involvement of the policyholder in the accident
- Offers compensation for loss of life, personal injury, and property damage to the third party
- The premiums of this type of car insurance policy are affordable
- Does not provide coverage to the insured car
Third-party Insurance: How To Claim?
For receiving compensation from the insurance company, the policyholder has to adhere to the claim rules. The steps to process third-party car insurance policy claims entail:
- The insurance holder must update the insurance company about the accident within the given time frame as mentioned in the motor insurance policy document.
- File an FIR at the police station nearest to the accident site and obtain a copy of the same.
- File a claim. It includes filling out the form and submitting the mandatory documents.
- Once the claim is filed, the insurer appoints a surveyor to assess the damage and provide a cost estimate. After assessing the damages and injuries, the surveyor submits the report.
- As per the report findings, the insurer settles the claim.
Third-party Insurance Policies: What Is Included and What Is Not
What Is Included
Among third-party insurance cover benefits, policyholders get protection against damages to third parties that are caused by the insured vehicle. Physical injuries, damage to property or vehicle, and death are covered under this type of motor insurance policy.
What Is Not Included
Third-party insurance does not have any provisions for:
- Accidents that ensue when the vehicle driver is under the influence of alcohol
- The vehicle driver being underage or not having a valid driving licence
- Accidents that are caused deliberately
- Vehicles being used for illegal or commercial uses
- Stolen vehicles
For enhanced coverage, you must opt for comprehensive plans. Besides covering third-party liabilities, comprehensive plans cover damages caused to the policyholder’s car as well.