The Buyt Desk
The Supreme Court has made 3 year Third Party insurance policy for cars and a 5-year policy for 2-wheelers mandatory which covers the damage caused to a third party.
According to Section 146 of the Motor Vehicles Act, 1988, to drive on Indian roads it is mandatory to have third party (TP) insurance. Whenever there is damage caused to a third party by the vehicle having TP insurance, the damage is covered by this insurance. When the policyholder is legally liable to compensate the third party for death or damages caused by the vehicle, TP insurance comes into play. TP property damages cover sum is up to Rs 7.5 lakh and any additional expense beyond this cover should be borne by the policyholder.
What is Third Party Insurance?
Motor third-party insurance also known as third-party liability cover is ‘act only’ cover. Under the Motor Vehicles Act, it is a statutory requirement. It gets the name ‘third-party’ cover as the beneficiary of the insurance cover is not the two parties involved in the contract but the third party. Both the car owner and the insurance company are not covered under this insurance nor provide any benefit to the insured. TP insurance covers the policyholder’s legal liability caused by the vehicle accident which can be either damage to the third-party property or death/disability of third-party loss.
Why is third-party insurance mandatory?
If a vehicle owner wants to compensate the victims without denting the owner’s finances, third-party insurance is the solution. This is the main reason that third-party insurance is mandatory for every vehicle on Indian roads. Also, the victim without his/ her fault will suffer significant financial losses if the vehicle owner doesn’t cover it. For the safety of victims, third-party insurance is mandatory for every vehicle on Indian roads. Even after this rule is enforced, nearly 60% of vehicles on Indian roads are uninsured (TP policy). And because of this negligence from the vehicle owner, innocent accident victims have to pay from their pockets for their medical treatments or property repair expenses.
What is covered under the third-party insurance policy?
The third-party car insurance policy covers the car accident victim’s (third party) injury, disablement or accidental death if needed and also covers treatment costs and legal fees. Other than a person, it also covers repair costs of damage done to the victim’s property during the car accident. This policy covers only third parties and not the policyholder or insured car.
How does third-party insurance work?
After the insured car is met with an accident and causes damage to a third party (victim). Damage can be caused either to a person or property.
-
The victim of the accident should file an FIR at the police station. It should state that the car owner (policyholder) is at fault.
-
The car owner will receive a charge sheet.
-
The car owner needs to register a case with the Motor Accident Claims Tribunal. This special court deals with road accident-related cases. The jurisdiction of case registration should be either the accident occurred area or the place of residence of the car owner.
-
From the perpetrator’s third-party car insurance, the victim can claim this amount.
-
The maximum claim amount will be the same as the sum assured. If it is more than that amount then the car owner should pay it from his/ her pocket.
What does third-party insurance not cover?
-
Only the damage caused to a third-party person or their property is covered by the third-party car insurance policy and does not cover the policyholder or the damage to the insured vehicle.
-
Only one claim for the accident can be made.
-
In case the compensation awarded by the Motor Accident Claims Tribunal is lesser than the cost of repairs, the third party cannot file a claim with their own insurer.
-
The maximum limit of the insurer’s liability is Rs 7.5 lakhs. Any compensation beyond this amount needs to be borne by the policyholder.
Summing up
Third-party insurance is a must for all vehicles on Indian roads to help both the vehicle owner and the victim of the accident. The Third party insurance cover is capped at Rs 7.5 lakh. The process of filing a TP claim and receiving compensation is a long procedure, time-consuming and a big hassle. Compensation is not always guaranteed. Only under severe circumstances going through this hassle of claiming compensation is recommended else if it is just vehicular damage, out-of-court settlement is advised. To cover your own vehicle damage you need to have a comprehensive insurance policy.
