If you own a car, you need to insure it. That is the rule. Therefore, people start looking for insurance. While searching for insurance, the following questions prop-up in their mind: What is Third-party insurance? What does the Third-party insurance cover? What is Comprehensive and third-party insurance? Other questions related to jargon and features also come up. 

Third-Party Car Insurance – Benefits, Buy/Renew Online - Acko

The answers to major questions related to car insurance are easy, inter-related, and understandable, only if you know the right place to look for them. Here’s an article that will answer questions related to what is Third-party car insurance?

What is Third-party Car Insurance?

Third-party car insurance is the mandatory insurance, which all Indian car owners must purchase for their cars as per The Motor Vehicles Act. 3rd Party Car Insurance is also known as Act-only or Liability car insurance. It helps you to stay on the right side of the law and protect your savings against third-party liabilities.

How Does Third-party Car Insurance Work?

Third-party car insurance works by insuring the policyholder against liabilities arising due to injury sustained by a third party or damage to a third party’s property by the insured car. In such a scenario, the third party will most likely demand compensation to treat injuries or repair damages from the car’s owner. A case will be filed and the owner’s car insurance company reimburses the third party. This is a simplistic explanation of how third-party car insurance works.

The situation gets complex when you happen to crash your car into another vehicle. In almost all cases, there is a need for a First Information Report to be filed with the police. Third-party cases are settled as per the Motor Accident Claims Tribunal.

Third-party Liability in Car Insurance:

The three parties in car insurance are as follows:

First party = Policyholder
Second party = Insurance company
Third party = another person, for example, a pedestrian.

The first party is liable to compensate the third party for the damages. As the first party has an insurance policy with the second party, the claim (as per terms and conditions) is settled by the insurance company.

If a third party is badly injured by the insured car, the policyholder is liable to pay for the injuries. If the injury is such that it doesn’t allow the injured to work, the policyholder is liable to pay the compensation accordingly. In case of death, the deceased person’s worth shall be ascertained and the policyholder will be liable to pay the amount to the dead person’s family.

Key Features of Third-party Liability Insurance:

Here’s a list of top features for a Third-party policy.

Low Premium:

A third-party liability policy is available at a low price. It is available at a nominal price compared to the Comprehensive plans.

Easy Purchase Process:

The process to purchase a third-party liability is simple. As it is a standard policy, there is not much to choose from. You simply have to select your car’s make and model and purchase the policy.

Liability Cover:

A Third-party liability policy will cover you against personal injuries to a third party and property damages to a third party (up to 7.5 Lakhs).

Personal Accident Cover:

There is a Personal Accident Cover included with a Third-party Liability plan. It offers insurance coverage up to Rs. 15 lakhs for the owner/driver.

Third-Party Motor Insurance Premium Rates for FY19-20:

Unlike a Comprehensive policy, the premiums for a Third-party Liability policy are not decided by the insurance companies. The premium is decided by the Insurance Regulatory and Development Authority of India (IRDAI). The IRDAI usually revises this premium on an annual basis. They take this decision after assessing the situation from all angles. Here’s a table showcasing third-party motor insurance premium rates for the financial year 2019-20.

The capacity of the vehicle’s engine Revised premium  Rates for FY 19-20 (Rs.)
Not exceeding 1000cc 2072
Exceeding 1000cc but not exceeding 1500cc 3221
Exceeding 1500cc 7,890

Third-party Car Insurance Premium Calculator:

You can come to know your Third-party Liability policy’s quote with the help of a third-party car insurance premium calculator. Usually, such a calculator is placed on the insurance company’s web site’s home page itself. It is a part of the purchase journey, wherein if you are comfortable with the quote, you can go ahead and buy it with a few clicks.

As there’s not much to chop and change in a Liability-only policy, you just have to specify your car’s information like brand and model (which also conveys the engine capacity) in the third-party insurance premium calculator to know the quote.

Benefits of Third-party Insurance:

Here’s a list of Third-party insurance benefits.

Convenience:

A third-party car insurance policy is a simple plan. It does not have complex features like a Comprehensive policy. Therefore, it can be purchased without giving much thought and going into analysis like insurance requirements and adequate coverage. If you plan to buy it online, you can do so conveniently through your smartphone within minutes.

Compliance:

Buying a third-party car insurance policy makes you compliant with the law of the land. An active policy will save you from paying penalties. Driving a car without an active third-party policy can also lead to imprisonment. By buying this plan and renewing it before its expiry, you stay away from being imprisoned for legal violations.

Liability Cover:

The policy offers a liability cover against injury to third party and damages to third party property. In a way, it is a financial cover for you when it comes to paying third parties.

Financial Cover:

A third-party policy will insure you against permanent disabilities with a cover of up to Rs. 15 lakhs. This comes as a Personal Accident Cover. Without such a cover, you might face a financial blow in case of car injuries leading to disabilities. In case of death in a car accident, the proceeds will go to your family.

What’s Covered in a Third-party Car Insurance Policy?

Here’s a list of all that’s covered in a basic Third-party Car Insurance Policy.

  • Third-party Injuries:

There might be an instance where your car accidentally injures a third party. For example, your car might accidentally go out of control for a moment and injure a pedestrian walking on the footpath. The third-party policy will cover the cost to treat such injuries.

  • Third-party Death:

In an unfortunate event, you might accidentally injure a person with your car leading to the person’s death. The third-party policy will take care of reimbursing the deceased person’s family members as per the terms and conditions.

  • Third-party Property:

Damage to a third person’s property is also covered under a third-party policy. For example, your car might go out of control and crash into someone’s shop along the road. This policy insures you against the expenses arising out of such instances up to Rs. 7.5 lakhs.

  • Third-party Vehicle:

This cover is a part of the third-party property point but mentioned separately as it is a common occurrence. Your car might run into a third-party’s bike on the road. The policy will cover damages to the bike as per terms and conditions.

  • Personal Accident Cover:

A third-party policy covers you in case of permanent disabilities arising out of a car accident. The cover for such instances is Rs. 15 lakhs as per the terms and conditions. It also covers death.

What’s Not Covered in a Third-party Car Insurance Policy?

Knowing just what’s covered will not be helpful. To get a complete overview of the third-party policy, you must know what is excluded by the policy as well. Here’s a list of things that are not covered under the third-party policy.

  • Damage to Your Car:

A Third-party Car Insurance policy does not offer ‘Own Damage’ cover. For that, you will have to purchase a Comprehensive plan. An Own Damage cover insures you against damage to your car.

  • Driving While Violating Rules:

Your third-party policy will not cover you against situations in which you were found to be violating traffic rules. For example, drunk driving, driving in an intoxicated state, driving without a valid license, etc. will not be covered.

  • Driving with an Expired Policy:

Your third-party policy will not offer any cover if it has expired.

Buy/Renew Third-party Car Insurance Online:

Why go through the trouble of filling forms for availing car insurance when you can simply buy/renew Third-party car insurance online? Nowadays, a plethora of products and services are available online, so is the case with car insurance. Buying or renewing car insurance online is quick and hassle-free. You just have to visit the website of the insurance company you prefer, enter basic details, and purchase the policy. The entire process can be completed within five minutes.

How to Renew 3rd Party Car Insurance Online?

Renewing 3rd Party Car Insurance online is an easy process. It does not take much time either. You simply visit your existing insurance company’s website, log in to your account, and renew the existing policy by making the payment.

You also have the option to choose a different insurer while renewing your policy. The premium charged for the policy will remain the same as it is prescribed by the IRDAI. However, you can check out the services offered by a different insurer if you are not satisfied with your current insurer, and make the switch at the time of online third-party car insurance renewal.

Alternatively, you can also choose to opt for a Comprehensive policy. It includes the mandatory third-party cover and also offers Own Damage cover. Make sure to compare Comprehensive plans and read the terms and conditions before finalizing the plan.

Steps to Claiming Third-party Insurance:

Claim settlement in a third-party insurance policy is a complex process. It is not as simple as it is in a Comprehensive policy. You cannot simply call your insurance company to take care of the matter. There’s a legal process involved. The steps to raise a claim might be different on a claim-to-claim basis. Here’s an overview of the steps that are involved in settling a Third-party claim.

Step 1 – Informing insurance company.

Step 2 – Filing of the FIR. (the third-party files the FIR)

Step 3 – Registration of the case in the Motor Vehicle Tribunal.

Step 4 – Hearing of the case in the Motor Vehicle Tribunal. The Tribunal will go through all the collected evidence and the testimonials.

Step 5 – Result of the case in the Motor Vehicle Tribunal. The hearing and the declaration of the result can take time.

Step 6 – Settlement of claim amount.

How to Get the Cheapest Third-party Car Insurance?

Unlike a Comprehensive Plan, the rates for a Third-party Car Insurance policy do not change from one insurer to another. The rates are determined by the IRDAI and remain standard for all insurers. The IRDAI might decide to vary it on an annual basis but all insurers have to abide by the rate stated by the IRDAI. Thus, there is no way to get the cheapest Third-party Insurance policy as the third-party policies offered by all insurers are priced the same.

Third-party Car Insurance for Private Vehicles:

This type of car insurance is the most common. It is for cars owned by the common people. Such insurance can be purchased online in a matter of minutes.

Also, read: 8 Advantages of Buying Car Insurance Online

Third-party Car Insurance for Commercial Vehicles:

Whether you own a private vehicle for commuting or a commercial vehicle for business purposes, you need to purchase a third-party policy. Commercial vehicles are primarily of two types: vehicles that carry passengers, and vehicles that carry goods.

The basics of a Third-party Car Insurance policy remain the same for a private and a commercial vehicle, however, there might be slight variations with respect to the cover, premium, and terms and conditions. The online purchase process of a commercial policy is also different than the process for a private one. It can still be purchased from the website but from a different section.

Types of Car Insurance Plans:

Whether you buy a private car insurance policy or a commercial car insurance policy, there are two types of car insurance plans for you. They are as follows:

  • Third-party Liability Car Insurance:

This is a basic plan mandated by law. It has no frills and comes at a low premium. It does not have any Add-ons apart from the inbuilt Personal Accident Cover.

  • Comprehensive Car Insurance:

A Comprehensive plan offers wider coverage. It offers Own Damage cover as well as the features of the Third-party Liability Car insurance policy. You also have the option to choose from a wide range of Add-on covers while purchasing a Comprehensive plan.

Which policy is better, Comprehensive or Third-party Car Insurance?

The exact answer to the above question will depend upon your requirements. On an overall basis, a Comprehensive plan scores over a Third-party policy as it offers enhanced coverage. You also have the option to purchase suitable Add-ons with a Comprehensive policy. It charges more premium than a third-party policy but it also offers better insurance coverage.

Frequently Asked Questions:

Why is it mandatory to purchase Third-party Car Insurance in India?

It is mandatory to purchase Third-party Car insurance in India as it is demanded by The Motor Vehicles Act.

What happens if I am caught driving my car without a valid Third-party Car Insurance policy?

Driving without a Third-party Car Insurance policy is a legal offence. Therefore, you will be penalized for it. The penalty includes a monetary fine. You can also be imprisoned for it.

Is there a better policy than a Third-party Liability policy?

A Comprehensive policy can be a better option than a Third-party Liability policy as it offers wider coverage.

Do I have to do some paperwork to buy Third-party Car Insurance online?

Usually, there is no need for any paperwork while buying Third-party car insurance online.

Is it possible to renew a Third-party Car Insurance policy online if I had purchased it offline?

Yes, it is possible to do so. You will have to visit your insurance company’s website for details. However, you can also choose to buy third-party insurance online for a car from a different insurer while renewing the policy.

How do I physically carry my online Third-party Car Insurance policy?

You can take a printout of your online Third-party Car Insurance policy and carry it in the physical form.

What if there is a mistake in my Third-party Car Insurance policy document?

If there are any typographical errors or minor errors such as a change in address or contact number, you can get those done quickly via an endorsement process by contacting your insurance company. Major changes such as modifications in the engine can also be done via an endorsement but it can affect the premium.

What happens to my Third-party Car Insurance policy if I sell my car?

If you are selling your car, you have two options for your Third-party Car Insurance policy: you can either cancel it or transfer it to the new owner. In both cases, you will have to submit the required documents.

Is it possible to purchase a Roadside Assistance Add-on with a Third-party Car Insurance policy?

No, you cannot purchase a Roadside Assistance Add-on with a Third-party Car Insurance policy. You cannot purchase any Add-ons with a third-party policy. You can purchase Add-ons with a Comprehensive policy.

Does the model of my car matter while buying a third-party policy?

The premium for a Third-party Car Insurance Policy is based on the vehicle engine’s cubic capacity. As different car model engines might have different cubic capacities, the premium for them might be different.

Is there a need to file a First Information Report in case of a third-party claim?

Yes, there is a need to file a First Information Report in case of a third-party claim.

Who handles the cases filed for third-party claims?

Third-party claims are handled by a dedicated court known as the Motor Accident Claims Tribunal. 

Is there a limit when it comes to the compensation offered by the insurance company under the third-party property damage clause?

Yes, there is a limit of Rs. 7.5 lakhs concerning the compensation offered by the insurance company under the third-party property damage clause

Is there a limit when it comes to the compensation offered by the insurance company under the third-party injury/death clause?

There is no limit when it comes to the compensation offered by the insurance company under the third-party injury/death clause

I am a good driver with a clean claim record. Is it possible for me to not buy a third-party policy and drive my car?

All car owners must purchase a third-party policy irrespective of their driving skills or claim records.

Is there a time limit before which one has to file a claim?

Ideally, a third-party claim needs to be filed within 60 days from the accident. One should do it at the earliest.

Someone else was driving my car at the time of the third-party accident? Will my insurance company settle the claim?

The third-party policy is for the vehicle. Therefore, the insurance company can settle the claim provided the person driving the car was driving it legally with a valid driving license.

Does a Third-party Car Insurance policy offer sufficient coverage?

A third-party cover only looks after third-party liabilities. If you are looking for a policy that will offer you sufficient coverage, you should consider a Comprehensive policy.

Will my third-party policy cover me if I purchase it from one city but the car accident takes place in another city?

Yes, a Third-party Car Insurance policy offers nationwide coverage. You can purchase the policy from any Indian city and it shall cover you throughout the country.

What are the eligibility criteria for purchasing a Third-party Car Insurance policy?

You need to own a registered car to buy a Third-party Car Insurance policy.

On what basis should I compare Third-party Car Insurance policy providers as the premium for it is the same across insurers?

You can compare insurers offering third-party policy based on their service quotient.

Where can I find the detailed Policy Wordings of the Third-party Liability Car Insurance policy?

You can find the detailed Policy Wordings of the Third-party Liability Car Insurance policy on the insurance company’s website. Usually, it should be placed under the Downloads section. You can download the Policy Wordings for a Liability-only car insurance policy for three years offered by Acko over here

From where can I purchase a Third-party Liability Car Insurance policy?

You can buy 3rd party car insurance from the showroom from where you purchased your car, from a certified agent, from the insurance company’s branch office, or the insurance company’s official website.


News Related to Third-party Insurance:

COVID-19: Third-Party Vehicle Insurance Premium To Remain Unchanged in Next Fiscal

– April 2, 2020

The Insurance Regulatory and Development Authority of India (IRDAI), in an order dated 27 March 2020 has directed that the premium for Third-party vehicle insurance will not be revised for FY 21. In the wake of the rising Coronavirus infections in the country, the government has announced a 21-day lockdown. The order issued by the insurance regulatory states that the premium for the Third-party motor insurance which was set for the year 2019-20 will continue beyond 31 March 2020 till there is a further notice. Insurance companies will continue to charge the same third-party vehicle insurance premium from 1 April 2020 in an effort to provide some relief to policyholders in the country.

Third-Party Vehicle Insurance Premium Increase Put on Hold for Now

– March 30, 2020

The Insurance Regulatory and Authority of India (IRDAI) has announced that the current third-party insurance premium prices for the year 2019-20 will continue beyond 31 March 2020. The announcement comes amid the ongoing lockdown due to the deadly novel Coronavirus infections. In an order released by the IRDA, the validity of third-party insurance premium will be increased and remain unchanged beyond the due date of 31 March 2020 until further notice. This effectively means that insurers cannot increase or will continue to offer third-party vehicle insurance at the current rate set by the IRDA until the regulator revises the premium.

Third-party Motor Insurance Premiums Expected to Increase by up to 15%

– March 11, 2020

The third-party vehicle insurance for the next financial year 2020-21 is expected to rise by 15%. The revised structure will be effective from 1 April 2020. The increase in premium for the insurance will be across all automobile segments. A proposal of a 2% hike is expected on commercial vehicles, while electric vehicles will witness a hike as well. Long-term third-party vehicle insurance for both two-wheelers and four-wheelers is mandatory as per the directive by the Supreme court. While the long-term insurance policy is 3-years for four-wheelers, it is 5-years for two-wheelers.



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