A third-party liability insurance is a financial cover for vehicle owners which protects them against legal liabilities arising due to loss or damage caused to a third-party person or property. Per the Indian Motor Vehicles Act,1988, insuring your vehicle with a third-party liability cover is mandatory.
In case of an accident, if your car has caused injuries to another person, you are liable to pay for the person's hospitalisation costs. With third-party liability insurance, your insurer covers such liabilities. Similarly, if a third-party property was damaged due to your vehicle, the costs to repair the damage is covered by your insurer as well.
You can opt for a third-party liability insurance or a comprehensive car insurance policy that offers overall protection against damages to your car. A comprehensive plan is inclusive of third-party liability cover.
Key Features Of Third Party Liability Insurance
Car owners can enjoy the following features with their third party car insurance policy:
Your insurer typically has tie-ups with several garages. A third-party involved in an accident can get their damaged vehicle repaired at any of the cashless garages. You need not pay for the repairs from your own pocket. Your insurer will settle the bills with the garages directly.
Base premium rates for third-party liability insurance are determined by the Insurance Regulatory and Development Authority of India (IRDAI). The rates differ across the engine displacement values. A low engine displacement will have lower premiums and contrariwise.
Hassle-free buying process
You can purchase the third-party car insurance online within five minutes using your smartphone. Additionally, you can buy the policy online through the Reliance General Insurance website.
High coverage for vehicle or property damage
For any damage caused to someone's vehicle or property due to your insured car, third parties can get up to Rs 7.5 lakh in claims per a mandate by the Insurance Regulatory Development Authority of India (IRDAI).
Unlimited liability for personal damage
For third-party liability insurance, the liability for personal damage caused to third-party persons in the form of injuries is unlimited. The insurer covers all medical expenses, regardless of the cost.
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How Does Third-Party Car Insurance Work?
To understand how third-party car insurance works, it is imperative to break down the meanings of all the parties involved in the insurance universe, namely:
The person whose car is insured, i.e., the policyholder or the car owner is considered the first party.
The entity that agrees to cover liabilities is the second party – in this case, the insurance company/insurance provider/insurer.
The person deemed the beneficiary of insurance coverage due to an incident caused by the first party.
If you find yourself in a car accident, you must inform your insurance provider about the incident at the earliest. If you are deemed responsible for the accident, and the third-party driver also considers you responsible, you can expect the third-party to file a claim against you. The financial liability of the claim will be borne by your insurance provider.
What Are Benefits Of Third-Party Car Insurance?
A third-party car insurance comes with the following benefits:
You can drive legally
By law, it is mandatory to insure your car with at least a third-party liability insurance. If you get caught by the authorities for driving a car without insurance, you have to pay a hefty fine. Violating such laws can also lead to imprisonment for up to three months. Thus having a third-party insurance gives you peace of mind that you are following the law and will not attract fines.
You can protect yourself from unwarranted losses
Even if you practice the highest level of safety while driving, accidents are bound to happen. If you are responsible for causing injuries or damage to a third-party person or property, you have to bear the costs of such liabilities. With third-party liability cover, your insurance provider pay for such costs.
You can cover personal injuries
Your insurance plan also comes bundled with a mandatory personal accident cover to help manage your hospitalisation and treatment expenses. You may also be eligible for a monetary cover in case of accidents leading to permanent disability. The policy also includes a death benefit paid out to the policyholder's family in case of the policyholder's death in an accident.
Covers damage caused to the third-party property
During an accident, your car may collide with another vehicle or cause damage to someone's property. If that happens, you shall be liable to pay for expenses to repair the damages. The cost of repairing damages can put a massive dent in your pocket. Your third-party liability insurance can take care of such expenses on your behalf.
Covers injuries caused to third-party person
If your car causes injuries to a third-party, you become liable to pay for their medical expenses. These may include hospitalisation, doctor's fees, medications, tests, etc. Per the terms of the third-party car insurance plan, the insurer bears the costs associated with third-party hospitalisation and medical expenses.
Third Party Car Insurance Rates
The cost of third party car insurance is standardised by the IRDAI, i.e., it remains the same across all insurance providers. W.e.f. 1st June 2022, the base premium for third party liability insurance is as follows:
For private cars: