Understanding third-party car insurance
Third party car insurance is also known as act-only insurance. It is insurance for your vehicle and is required to be purchased by all vehicle owners according to the Motor Vehicle Act. This insurance, as the name suggests, offers protection towards damages incurred to a third party vehicle. It covers damages to personal property and bodily injuries of the third party. There is no coverage for insurers in third party car insurance.
How does third party car insurance work?
In the event of an accident, the insurer may need to offer a financial settlement to cover the cost of repairs and treatment to a third party. Instead of paying out of your pocket, third party car insurance reduces the financial burden for the insurer by covering these costs. However, the vehicle owner must inform the insurance provider as soon as possible to file the claim.
Once you file the claim, the insurance company will appoint a surveyor who will assess the damages and suggest the cost of repairs. The insurance company will settle the claim once all verification formalities are complete.
Benefits of third-party car insurance
- Third party car insurance is legally required for all vehicles being driven on the road. Having valid third party car insurance helps you stay compliant with legal obligations.
- A third party car insurance protects your finances against sudden accidental risks.
- A third-party car insurance gives peace of mind to know that there is adequate protection against damages caused to a third party in the event of an accident.
What is not covered by third party car insurance?
Third party car insurance is very useful in covering losses due to damages or injuries to the third party. It is also legally required, even if your car is stationary in your parking. However, third party car insurance is just not enough as there are various exclusions to it.:
Coverage for own damages
Third party car insurance covers only third party damages, and any damages incurred to your vehicle will have to be covered by your pocket.
It is important to remember that if your vehicle is involved in an accident as a result of drunk driving by the owner, your insurance provider will not cover the liabilities arising from a third party.
Missing or invalid licence
In case the driving licence of the owner is missing, invalid or expired, there will be no coverage for damages to the third party.
Accidents outside the geographical limit
If the insured vehicle is involved in an accident beyond the geographical area covered as per the policy document, the damages will not be covered.
In case the insured car has been pledged to someone else, and the accident occurs during that period, there will be no claim settlement by the insurance company.
If the insured vehicle is being used for commercial uses, speed racing or illegal activities and causes damage to the third party, then those damages will not be covered by the insurance provider.
An undesignated driver
If the car is being driven by an undesignated driver or someone other than the owner/driver, in those cases the claims will be deemed invalid.
What are the features of third party car insurance?
- Third party car insurance offers the minimum level of protection to vehicle owners.
- This insurance offers protection against any legal obligations that may arise due to the accident.
- This insurance covers loss of life, personal injuries and damage to property of the third party owner.
- It is also known as act only or refer only policy.
- This policy comes at a fixed and affordable premium.
- A third party car insurance does not offer protection to the insured car or its owner.
How to claim third party car insurance?
To file for compensation from the insurance provider, the vehicle owner must follow the claim filing rules strictly.
- The policyholder must inform the insurance company about the details of the accident within the time mentioned in the policy document.
- The vehicle owner must report to the nearest police station and file an FIR. A copy of the FIR is an essential document to file for compensation.
- The next step is to fill up the claim form with all required documents.
- The insurance company will now send a surveyor to check the damages and verify the cost.
- Based on the report filed by the surveyor the insurance provider will settle the claim.
Things to remember when filing a third party car insurance claim
1. Do not forget to file an FIR
You must not forget to file the FIR at the nearest police station. Also, inform your insurance provider about the accident immediately. Not doing so, can lead to the rejection of the claim.
2. Record the evidence
Make sure you record enough evidence about the accident in the form of photos or videos.
3. Understand the maximum liability
Even though there is no limit to compensation claims towards bodily injuries or death of a third party, the maximum claim amount for third party property is capped at Rs 7.5 lakhs.
Why do you require third party car insurance?
Accidents and unfortunate scenarios do not come with a warning. Third party car insurance offers financial protection against third party losses so that you do not have to bear them from your pocket.
It is the mandatory car insurance required for all Indian vehicles and is also quite affordable. For those who cannot afford a comprehensive insurance policy, third party insurance offers the bare minimum financial coverage.
Having valid third party car insurance ensures you are compliant with motor laws and saves you from paying hefty fines. It can also lead to your driving license being suspended. Hence, with third party car insurance, you are saved from such hassles.
Third-party car insurance protects you from the financial burden of covering losses incurred by a third party vehicle or person. It is essential as per the law and quite affordable. So, investing in third party insurance is a wise choice.
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.