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

Third Party Car Insurance

TP Car Insurance

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If you want to drive your car on Indian streets, you mandatorily need to own a Third-party insurance plan as per The Motor Vehicles Act. Here, let's look at what is Third party insurance, how does it work, inclusions, exclusions and many more.

What is Third-party car insurance?

Meaning

Third-party car insurance is the mandatory insurance, which all Indian car owners must purchase for their cars as per The Motor Vehicles Act, 1988. Third-party car insurance is also known as Act-only or Liability car insurance.

Significance

It helps you to comply with the law and protect your savings against third-party liabilities such as injuries to someone else or damages to their property.

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.

In the case of third-party liabilities, 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 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 (FIR) to be filed with the police. Third-party cases are settled as per the Motor Accident Claims Tribunal.

Third-party Liability in car insurance

There are three parties involved in third-party car insurance.

First party

The first party i.e. the policyholder is liable to compensate the third party for the injuries or damages to their property.

Second party

The second party is the policyholder's insurance company, which compensates the third party as per the terms and conditions of the insurance policy.

Third party

Third party can be any other person, for example, a pedestrian who has sustained injuries or damages to their property by the first party's insured vehicle.

If the injury to the third party 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 deceased person’s family.

Key features of Third-party Liability insurance

Here’s a list of top features of a Third party car insurance policy.

Low premium

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

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 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 Rs. 7.5 lakh.

Personal Accident (PA) cover

PA cover is mandatory by law. Hence, it is recommended to buy this cover along with a Third-party Liability plan. It offers insurance coverage up to Rs. 15 lakh for the owner/driver in case of death/permanent disability while driving.

Third party car insurance premium rates

Unlike a Comprehensive policy, insurance companies do not decide the premium for a Third-party policy. The premium is decided by the Insurance Regulatory and Development Authority of India (IRDAI) based on the cubic capacity of the car’s engine. The premium rates set by IRDAI are subject to changes. Here’s a table showcasing third-party car insurance premium rates for FY2019-20.

The capacity of the vehicle’s engine Revised premium rates for FY 19-20 (Rs.)
Not exceeding 1000cc Rs. 2,072
Exceeding 1000cc but not exceeding 1500cc Rs. 3,221
Exceeding 1500cc Rs. 7,890

Factors that affect your third-party car insurance premium

While ACKO decides the Comprehensive Car Insurance prices, third-party insurance rates are decided by the industry regulator (IRDAI) based on the cubic capacity of the car’s engine.

For more on the current (FY 2019-20) four wheeler third party car insurance price, you can refer to our section on third party car insurance rates.

Benefits of Third party insurance

Here’s a list of Third party car insurance policy benefits.

Convenience

A third-party car insurance policy is a simple plan. It does not have complex features like a Comprehensive policy. If you plan to buy it online, you can do it conveniently through your smartphone within minutes.

Compliance

Buying a Third party insurance policy makes you compliant with the law of the land. An active policy will save you from paying penalties. 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.

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 lakh.

  • 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 the terms and conditions.

What’s not covered in a Third-party car insurance policy?

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. Own Damage (OD Insurance) cover insures you against damage to your car in case of an accident, fire, man-made calamities, natural calamities and theft.

Personal Accident (PA) cover

Personal Accident cover is mandatory by law. A Third-party policy does not cover you in case of permanent disabilities/death arising out of a car accident. The cover for such instances is Rs. 15 lakh as per the terms and conditions.

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 you are driving on the streets with an expired car insurance policy.

How to buy/renew Third party car insurance online?

Buying and renewing Third-party car insurance online is a paperless, quick and hassle-free way.

How to buy/renew Third-party car insurance policy?

Visit www.acko.com or download the mobile app. Enter basic details such as car model, PIN code, registration year, previous policy details, etc. and purchase the policy. In case you want to renew your Third-party policy, simply login to your account, and renew the existing policy by making the payment.

How to switch insurers or change your insurance plan?

You 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. You can also choose to opt for a Comprehensive policy. It includes the mandatory third-party cover and also offers Own Damage cover. Since a Comprehensive plan offers enhanced coverage, you need to pay a higher premium amount.

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 a broad overview of the steps that are involved in settling a Third-party claim.

Step 1

Informing the insurance company (ACKO in this case) and filing the First Information Report (FIR) with the police. Normally, the third party files the FIR.

Step 2

Registration and hearing of the case in the Motor Accident Claims Tribunal. The Tribunal will go through all the collected evidence and the testimonials.

Step 3

Result of the case in the Motor Vehicle Tribunal. The hearing and the declaration of the result can take time. This will be followed by the settlement of the claim amount by ACKO.

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 all insurers offer these policies in exchange of the same premium amount.

Whether you own a private vehicle for commuting or a commercial vehicle for business purposes, you need to purchase a Third-party policy. 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 concerning the cover, premium, and terms and conditions. The online purchase process of a commercial policy is also different from the process for a private one.

Frequently asked questions about Third-party car insurance

Buying and renewal related FAQs

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, 1988. Not abiding by this rule can lead to heavy monetary penalties.

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.

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 penalised for it. The penalty includes a monetary fine and can even lead to imprisonment. Also, you cannot raise any claim in case of third party injuries or damages if you don’t have a valid Third party insurance policy.

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. It also covers damages to your car in case of an accident, fire, man-made calamities, natural calamities and even theft.

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 only 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 based on the vehicle engine’s cubic capacity is regulated by IRDAI. As different car model engines might have different cubic capacities, the premium for them might be different.

From where can I purchase a Third-party Liability car insurance policy?

You can buy Third-party car insurance from multiple places such as the showroom (from where you purchased your car), from a certified agent, from the insurance company’s branch office or online. However, buying Third-party car insurance online is a quick and hassle-free process.

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 for your car as well, you should consider a Comprehensive policy.

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 policies 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 a private vehicle for three years offered by ACKO over here.

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 www.acko.com for details. However, you can also choose to renew Third-party car insurance online from a different insurer.

Documentation related FAQs

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 from Insurtech companies such as ACKO. 

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 format. You can also download in it a PDF format or store it in DigiLocker for easy access. 

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 insurance policy if I sell my car?

If you are selling your car, you have two options for your Third party 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.

Claim related FAQs

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.

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 of the accident. However, it is recommended to 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.

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 anywhere in India and it shall cover you throughout the country.

Long-term Third-Party Liability vehicle insurance withdrawn

– June 10, 2020

The long-term Third-Party Package, which includes Own Damage cover as well for three and five years, has been withdrawn by the IRDAI. This applies for both two and four-wheelers with effect from 1 August 2020. The IRDAI observed that the delivery of long-term Third-Party Liability policies is difficult as it is expensive for both two-wheeler and four-wheeler owners. It added that the possibility of being linked to loans or forced selling was high and that the vehicle owners have no choice but to opt for the long-term product with no options. Additionally, the IRDAI said that the NCB is not the same across insurance companies, which could lead to dissatisfaction and confusion among policyholders. With this notification, customers won’t be given the option of long-term Own Damage plans, only long-term Third-party plans will be offered to customers.

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 further notice. Insurance companies will continue to charge the same third-party vehicle insurance premium from 1 April 2020 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 IRDAI, 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 IRDAI 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.

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.

1. Third-party Liability Car Insurance

This is a basic plan mandated by law. It has no frills and comes at a low premium. The rates for this policy are fixed by the Insurance Regulatory and Development Authority of India (IRDAI).

2. Comprehensive Car Insurance

A Comprehensive plan offers Own Damage cover as well as the features of the Third party car insurance policy. You also have the option to choose from a wide range of add-on covers.

Importance of Third-party Car Insurance

As per The Motor Vehicles Act 1988, it is mandatory for all motor vehicles to be insured with the Third-party Insurance Plan. Here is why it is important to secure your car with Third-party Insurance.

  • Financial and legal protection against third-party liabilities arising from an accident involving your insured car.

  • Financial protection against any property damages, death or physical injuries of third parties if you are at fault.

As per the IRDAI, the maximum coverage for third-party property damage is Rs. 7.5 lakhs, while there is no limit in case of injury or death of a third party. 

Thus, it is vital that you secure your car with the Third-party Liability Plan to protect yourself from third-party liabilities. You can instantly buy third party car insurance online (for example, www.acko.com) without having to visit a branch or approach an insurance agent.

Why buy third-party insurance online?

The process to buy third party insurance online for cars is simple, quick and hassle-free. The entire purchase journey is straightforward. Here are the reasons why you should buy third party insurance online for four-wheelers.

Hassle-free purchase process

Buying third party car insurance online is hassle-free and easy. At ACKO, you need to provide a few details of your car, such as registration number, model, year of manufacture, and previous policy (if available) on our official website or mobile app to insure your vehicle within a few minutes.

24*7 accessibility

You can access our official website and mobile app 24/7. Whether you are at your home, work or even travelling, access our online platform any time of the day to buy, renew or raise claims.

Paperless experience

There is no paperwork involved to buy third-party car insurance online. Enter a few details of your car and insure it with the Third-party Liability Plan instantly.

Comprehensive vs Third-party Liability Car Insurance Plan

The Third-party Insurance Plan is different as compared to the Comprehensive Insurance Plan. 

The Comprehensive Insurance Plan for cars offers wide-ranging benefits. Apart from coverage for third-party liabilities, it also covers damages to the insured vehicle. Damages or losses arising from accidents, natural and man-made disasters, theft, fire and explosion are covered under this plan.

Since the coverage is limited in Third-party Car Insurance Plan, the premium is lower as compared to the Comprehensive Insurance Plan.

Description Third-party Car Insurance Comprehensive Car Insurance
Physical injury and accidental demise caused to the third party by the insured car.
Coverage for damages to third party property. Provides coverage in case of damages to your car due to accidents, man-made/natural calamities, theft, fire or total loss.
Own damage coverage High, as it provides wide-ranging benefits.
Premium  Low High, as it provides wide-ranging benefits.

Points to keep in mind while raising a third-party car insurance claim

Here are a few crucial points that you need to consider while making a third-party car insurance claim.

File a First Information Report (FIR)

You (third-party) should file an FIR at the local police station and inform ACKO about the incident immediately. If you do not follow these actions, your third party insurance claim may be rejected.

Record evidence

Ensure there is enough evidence about the accident or incident to prove the other party’s mistake.

Understand the maximum liability

While there is no capped limit for compensation towards injuries or death, the maximum amount set for damages to third party property is limited up to Rs. 7.5 lakhs.

Disadvantages of a third-party car insurance plan

Third-party insurance for cars offers financial and legal protection against third-party liabilities. However, it also has its disadvantages when compared to the extensive Comprehensive insurance for cars. Here are the cons of a third-party car insurance plan.

No coverage for damages to your car

In case of an accident, the Third-party Car Insurance Plan offers coverage for third-party liabilities; however, it does not cover damages to your car. As a result, you have to bear the expenses towards repairing damages to your car if you have opted only for the Third-party Insurance Plan.

No coverage for vehicle theft

Apart from damages arising from accidents, your car could be stolen. However, under third-party insurance, vehicle theft is not covered. Only comprehensive insurance offers financial protection against vehicle theft.

No protection against natural/man-made calamities

Damages to your car arising from floods, earthquakes, and other natural calamities or damages due to riots, vandalism, and other man-made calamities are not covered under this plan. You have to bear the repair cost during such circumstances.

No protection against fire/explosion

In case your car is damaged due to a fire or an explosion, the Third-party Liability Plan (TP) does not cover such liabilities. You have to pay from your pocket for the repairs or losses.

No option to enhance the coverage

The third-party insurance does not have the option to enhance your primary plan’s coverage with add-on covers. Add-on covers offer an extra layer of protection by providing coverage for specific damages or losses. You may choose from add-ons such as Zero Depreciation, Engine Protection, Roadside Assistance, Return to Invoice, etc., for additional coverage at a slightly higher premium.

CIN: U66000KA2016PLC138288

IRDAI Registration No: 157

Category: Non-Life Insurance

The use of images and brands are only for the purpose of indication and illustration. ACKO claims no rights on the IP rights of any third parties. The ratings are derived from reviews and feedback received from Google and Facebook users on their respective platforms. | *Savings of upto Rs. 50,000 have been calculated on the IDV of Rs. 18,00,000 and 0% NCB. Amount saved is in comparison to tariff rates. Product name: Private Car Policy - Bundled | UIN: IRDAN157RP0014V01201819 |

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