Purchasing the best insurance can often be confusing especially with various terms that one needs to keep in mind. One must understand their role in the insurance to understand better about the beneficiaries. A person who buys a policy is the first party, the insurance provider is the second party, and damages caused to properties, vehicles, or other people are third-party. Third-party insurance is also known as act-only insurance where the beneficiary is specifically a third-party. The insured does not gain anything out of the insurance. As per the Motor Vehicles Act 1988, it is mandatory for all vehicle owners to own third-party insurance.
How does it work?
● The insurance provider who is the second party will aid financial support for the insured by paying for the damages caused to the third party
● Third-party bodily injury liability claim can be claimed when the policyholder is liable to pay for permanent disability as well as the death of the third-party
● Third-party property damage liability provides cover for property damage. This can be for another vehicle involved in the accident or for damaged landscapes
Benefits of Third-Party Insurance
● Third-party insurance offers legal cover and financial assistance to the policyholder. If a person does not have third-party insurance or forgets to renew it, they would have to pay from their pocket for legal liabilities and might even have to exhaust all their savings.
● Third-party legal liabilities are covered in this policy. It helps provide compensation to the third party
● Every vehicle owner must have this insurance as per the Motor Vehicles Act of India 1988
● This insurance is mandatory, the Insurance Regulatory and Development Authority (IRDA) had set a fixed price
● Since this is an essential policy, it is easily available and anyone can buy and renew the insurance online by visiting the insurance provider’s website
● In the case of third-party property damage (damage done to another car or property in an accident), the insurance company can provide compensation of up to Rs.7.5 lakhs
Inclusions of Third-Party Insurance:
● Third-party liabilities:
o Property damages
o Car damages
o Accidental Bodily Injuries
o Accidental Death
● Personal Accident Cover
o If the policyholder dies in an accident, compensation is paid to the nominee
o This personal accident cover for the policyholder can go up to Rs.15 lakhs
Exclusions of Third-Party Insurance:
The following are circumstances when the insurance is not applicable
● Damages sustained by the policyholder’s car is not covered
● Drunk and driving
● Invalid license or driving without a license
● If the damages are caused outside geographical limits mentioned by the insurance company
● Unauthorized usage by indulging in illegal activities, racing or commercial purposes, etc.
● If the owner of the vehicle or the designated driver wasn’t driving during the accident, the claim is not applicable
● Nuclear perils and war perils
How to Claim Third-Party Insurance?
● The first step is for the injured or the legal heir of the departed to make an application against the policyholder
● File an FIR with all the details required
● Register the case with Motor Accidents Claims Tribunal
● The IRDA limits the property damage cover to up to Rs.7.5 lakhs and after the final verdict, the policyholder will compensate the full amount
Accidents can happen to anybody, at any time. One could either be the owner of the vehicle or one could be the victim in the accident. As responsible citizens, one must face the consequences caused due to one’s actions. All vehicle owners must own third-party insurance. Click here to claim your insurance today!