Know all about third-party car insurance and your liability in an accident
For most people, buying a car is a dream. And when that dream finally comes true, you want to make sure to protect that dream with everything in your power. That is why you buy car insurance. Of course, another reason to purchase it is that the law has made it mandatory for everyone to have third-party car insurance. Keeping that aside, if you have recently purchased third-party car insurance, it would be best to learn everything about it. You must know the coverage, it’s working, and how it affects your liability in an accident.
What is third-party car insurance?
As per the Motors Vehicle Act, which governs all the rules and regulation related to driving motor vehicles in Indian, a third party car insurance is mandatory insurance that all car owners must have in India. It provides cover for damages caused to the third party due to your vehicle. This means you will be financially protected against loss to the third-party vehicle, property, or the third party themselves.
However, this policy does not cover your personal loss. This means you will have to pay for the damage to your vehicle and property and any medical expense for yourself out of your pocket. third-party car insurance also protects you from any legal repercussions of driving without insurance.
Benefits of third-party car insurance
There are many benefits of third-party car insurance, apart from the fact that it helps you comply with legal requirements. Let us take a look at them.
- Pocket-friendly: Third-party car insurance is more pocket friendly than comprehensive car insurance. Since it only covers third-party liabilities, the premiums are lower than other types of car insurance.
- Easy purchase: The process of purchasing third-party insurance is straightforward. The entire process is hassle-free and does not require many documents. You can even purchase it within a few hours of buying your car.
- Liability cover: The insurance protects you from third-party liabilities in the case of an accident.
- Convenience: As mentioned previously, third-party insurance is simple car insurance. Since it is the most basic and mandatory cover, there are limited choices, making it convenient to buy.
- Ensures peace of mind: Driving comes with its risks. Even if you are a responsible driver ever, there’s still a possibility of getting into an accident. Having third-party car insurance gives you peace of mind and removes the stress of a financial burden.
How does third-party liability in car insurance work?
Third-party car insurance has three parties. These three parties are as follows.
- First party: The first party is the policyholder. The policyholder is the person who purchases car insurance and is liable to pay the third party for any damage to their property or injuries to them.
- Second party: The second party is the insurance company of the policyholder. The insurance company is responsible for compensating the third party on behalf of the policyholder for the damage.
- Third-party: The third party can be anyone whose property was damaged or who was injured due to the first party’s vehicle. They are the person claiming compensation from the first party.
The primary aim of third-party car insurance is to remove the financial burden from the head of the car owner in case of an accident. In the event of an accident, the most important thing is to inform your insurance company as soon as possible. The insurance company will send a surveyor to survey the damage caused. Once everything is verified, they will pay the third-party compensation on your behalf.
Coverage under third-party car insurance
The coverage under third-party car insurance may differ from insurer to insurer. However, the basic coverage is as follows.
Inclusions
- Third-party vehicle: If your car runs into another vehicle, say a car or bike, and damages it, your car insurance will cover the cost of the damages as per the policy terms.
- Third-party injuries: In a situation where you accidentally injure a third party with your car, your insurance will cover the medical expenses of the third party.
- Third-party property: Any damage to the third-party property is also included in third-party car insurance. For example, if you damage someone’s house or shop, it’d be covered under your insurance to a certain extent.
- Death of a third party: If unfortunately, an accident with your vehicle results in the death of the third party, the insurance company will compensate the deceased’s family according to predetermined terms.
Exclusions
- Damage to your vehicle: Third-party car insurance does not provide financial cover for damages to your vehicle in the event of an accident.
- Personal accident cover: Personal accident cover is not provided under this policy. However, since it is mandatory, you have to purchase it separately.
- Driving without a valid driving license: The policy does not cover any damage caused while driving without a valid driving license.
- Driving under the influence of substance: If you were driving under the influence of alcohol or drugs, your car insurance would not provide any compensation.
- Unauthorized vehicle usage: If you were using the vehicle for an unauthorized action, such as racing, the policy would not cover any third-party liabilities.
Now that you know the ins and outs of third-party car insurance, you can start driving your dream car peacefully. Even though you have to be necessarily covered under a third-party car insurance, but be careful and avoid doing anything that may make you personally liable in case of an accident. Under all circumstances, you should drive responsibly. Lastly, read the policy terms and conditions carefully before buying it.
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.