Everything You Need to Know About Third-party Car Insurance

Choosing car insurance that meets your needs, fits your budget and serves you well in the face of a crisis is not easy. If you seek the opinion of people, then be prepared to handle a volley of ifs and buts and whatnots regarding choosing a policy, selecting the right add-on covers and picking the best insurance company. However, before you kick-start your research, note that third party car insurance is mandatory and there is no way you can evade it if you want to drive your car on Indian roads. Here is all you need to know about third-party car insurance and why it matters.

What is third party car insurance?

According to the MV Act, this policy is a statutory obligation for every car owner. Often known as an ‘act-only’ policy, the car insurance policy protects you from legal losses incurred by a third party due to an accident involving your car. Here, “loss” refers to property damage and physical injury.

Third-party car insurance is a basic cover and does not cover the cost of repairs and replacement of parts for your damaged car.

What does third-party car insurance cover?

• Property damage: If your car is involved in an accident and damages any third person’s property such as a door, wall boundary, or fence, the insurer will pay for such damages.

• Bodily injury: Injuries to third parties in accidents might be so serious that they require prolonged hospitalisation. And, if the injury is caused by your vehicle, you are legally obligated to cover the victim’s medical expenses. This is where, by saving you financially, third-party car insurance comes to your rescue.

• Partial or permanent disability or death: If in an accident involving your car, someone suffers a partial disability, the insurer will pay for the necessary medical expenses. However, in case of permanent disability, the victim receives the pre assured sum.

What is not covered under third party car insurance?

• Own damage: This kind of car insurance policy does not cover any damage to your car caused by an accident, natural or manmade disaster. So, you will not be able to avail repair services at a cashless garage.
• Drunk driving: If the driver of the car in question is found to be driving under the influence of alcohol, the third-party car insurance coverage will not be valid.

• Invalid licence: The insurer will not pay for third-party damages if you have third-party insurance but do not have a valid driver’s licence at the time of the accident.

• Unauthorised usage: The insurance will not pay for third-party losses if the insured car is used for illegal or dangerous sporting activities.

When should you buy third party car insurance?

• As it is mandated by law, you’ll need it all the time while driving on Indian roads. However, you can choose to buy only third-party insurance if you are facing financial issues and find a comprehensive policy out of your budget.

• When you buy a new car, you’ll need to purchase third party car insurance.

• If you are relocating to a new place and plan to keep your old car in the garage, third party car insurance is ideal.

• If you are going to replace your current car with a new one and won’t be driving it until then, this coverage is adequate.

What will happen if you are found driving without third-party car insurance?

Third-party car insurance is a basic cover and is mandatory by law. If you are caught driving without this insurance, you will be fined ₹2,000 on the first instance and ₹4000 on the second by the competent authority. In extreme cases, the concerned authority has the power to imprison you for a maximum of three months.

To sum it up

Third-party car insurance is a minimum cover that ensures the safety of people using the road. However, the policy does not provide extensive cover. You should either consider buying a standalone own damage policy with this car insurance or go for comprehensive car insurance.