Third-party insurance for cars covers only third-party liabilities and according to the law passed by the government of India’s motor vehicle act 1988, it is the most mandatory insurance cover required for your four-wheeler. The insurance company provides coverage for damage or injury to a third party or his property, vehicle or any death or permanent disability of the third party.
What is Third-party Insurance under Motor Insurance?
Third-party insurance under motor insurance is basic insurance coverage that is mandatory for every four-wheeler and every two-wheeler that a person might own. Motor insurance is compulsory as per law under the motor vehicles act. In that, the third-party cover is a must-have for all vehicles including two-wheelers.
What is Car Third-party Insurance?
Apart from the legal requirement of the third-party car insurance policy, when the policyholder hits another vehicle the insurance comes the most useful as a basic human responsibility to pay for the third party if the insured is at fault.
Car third-party insurance/four-wheeler third-party insurance provides cover for third-party liabilities arising out of :
- Physical injuries
- Permanent disabilities
- Death
- Vehicle damages of the third party
- Damages to the third-party property
As per the IRDAI rules, there is a maximum allowance of Rs.7.5 lakhs for third-party property damage. But there are no cover limits in case of the death of the third party. The amount will be based on the income, profession, age, status, etc of the third person under these circumstances.
The money will be paid directly to the third party by the insurance company if it is the insured’s fault. The policyholder will not get any cover under third-party car insurance. If he wants to get the benefits he should take a personal accident cover for himself or the person driving his vehicle.
At the time of an accident or loss, the insured’s vehicle value is not considered as it is a legal liability towards the third party. The lawyers of the third party play an important role in deciding the amount of claim to be given during such events.
What Is Covered Under Third Party Car Insurance?
As already mentioned the third-party insurance policy covers the liabilities that arise due to the third party accidental damage or losses. In the case of the death of the policyholder, there is no limit mentioned for the financial liability to be paid as it is only based on the claim by the MOC ( Motor Tribunal Court ).
Let us look at the details of the coverage offered:
Third-party Liabilities in Details –
- Property damages of the third party – Imagine the policyholder ramming his car that lost its brakes or any other reasons into a third party property such as their compound wall or maybe a shop or even the house itself. It could be anything. In such cases the loss or damage caused will be very huge or sometimes affordable. The insurance company however covers your liability for the damages up to a limit of only Rs.7.5 lakhs. If that goes beyond the limits the policyholder himself has to pay from his own pockets.
- Damages to the car of the third party – if the policyholder hits another car while driving his vehicle the insurance policy comes to help the insured to pay for the losses and damages caused in the event of the accident.
- Physical injuries incurred in the accident – in the event of an accident where the policyholder hits a third party and he/she suffers from any bodily injuries, the insurance company will pay the compensation amount to be paid in the place of the policyholder. However, only 50% will be paid by the insurance company if the third party suffers from partial blind eyesight or a lost limb.
- Accidental Death of the third party – if the policyholder or the car owner rams his car into a third party himself accidentally leading to huge fatal injuries to them causing his/her death or any form of permanent disability, then the insurance company will provide the compensation amount to the third party’s family.
What Is Not Covered By The Third-Party Car Insurance Policy?
Some things are not covered under third party insurance policy for four-wheelers those are mentioned briefly
The policy does not cover any situations like:
- Personal damages are accidental damages, fire damages, or damages due to natural disasters or even theft.
- If the policyholder’s license is not valid while causing injury to the third party in the event of an accident
- If the policyholder drives his vehicle Outside the mentioned limit in the policy where the policyholder crosses the allowed geographical limit as specified by the insurance terms and causes damage or injury to the third party
- If the policyholder drives his vehicle and hits someone or property of a third party after consuming alcohol or drugs.
- No cover if the private car is used for unauthorized purposes like racing, illegal activities, commercial purposes, etc., and hits a third party property or person.
- If the car is under a contractual liability.
- If it is anyone other than the owner or the driver who was designated for driving the vehicle.
- If the thor party gets injured or his vehicle gets damaged by using a nuclear weapon or any radioactive contamination by the insured.
- If the damage is caused due to war or any war-like activities or invasion.
*These are the main exclusions. There may be other exclusions as well depending on each insurance company. The policyholder should check the policy wordings thoroughly.
Major Benefits Of Third Party Car Insurance
When we learn in-depth about the benefits of third-party insurance we would be able to understand why or how it can rescue a four-wheeler owner at the time of an accident. Some of the important benefits of a third-party insurance policy are mentioned below
- Financial assistance – The damages or losses caused to a third party person lead to financial liabilities and your bank balance might get drained if you do not have help. The third-party cover for four-wheelers comes to the rescue in such circumstances and provides financial assistance to help the policyholder to pay off liabilities payable to the third party without draining your money.
- Assistance on Legal liabilities – The third party insurance covers every legal liability arising out of an accident that might have caused injuries to the third party individual. It pays for the damages as well as any physical injuries or even the death of the third party person.
- Affordable insurance policy – The third-party four-wheeler insurance policy is extremely cost-effective and promising in terms of its premium rates. However, when it comes to the liability amount to be paid to the third party the policy holder’s annual income is also considered.
Car Third Party Insurance Price List
The price list of four-wheeler third-party insurance depends mainly on the description of the vehicle class and the type of plans the insured decides to buy. The third-party insurance is divided into different sections according to the type of the vehicle categories for example whether it is an electric private vehicle, normal private car, public carrier vehicle, etc.
The premiums for Third-Party car insurance are calculated as per the IRDAI directions which is fixed at the start of the financial year. It is categorized based on the capacity of the vehicles that are mentioned in general below for private cars.
| Vehicle Capacity and One year Cover for Private Cars | Third Party insurance Premium starting amount |
| Cars less than 1000 CC | Rs. 2094/- |
| Cars More than 1000 CC and less than 1500 CC | Rs. 3416/- |
| Cars More than 1500 CC | Rs. 7897/- |
| Vehicle Capacity and Three-year cover for Private Cars | Third Party insurance Premium starting amount |
| Cars less than 1000 CC | Rs. 6521/- |
| Cars More than 1000 CC and less than 1500 CC | Rs. 10,640/- |
| Cars More than 1500 CC | Rs. 24,596/- |
Three-year-long third-party insurance cover for brand new cars
The guidelines of IRDAI provide instructions to the insurance companies to offer long-term third-party covers for brand new vehicles. The insurance companies now offer a three-year package as third-party insurance for cars. This will have a direct impact on the premiums as it is not like the annual insurance policies.
Personal Accident Plan
When the insured hits a third party vehicle or person or their property, the third party insurance does not give cover to the policyholder at the time of an accident. In such circumstances, most insurance companies offer a plan for the insured called personal accident cover under the same third-party car insurance. The policyholder has a choice to opt for the plan when purchasing third-party insurance.
The owner of the car will get compensation if they suffer from any disability or die as a result of the accident. If the policyholder dies then the compensation is paid to the nominee appointed by him/her. The personal accident cover is available for a maximum of Rs.15 Lakhs.
What Is Limited Third Party Insurance?
Limited third-party insurance is nothing but the third-party-only insurance policy offered by the insurance companies. While the common third party insurance comes under the comprehensive plan where the insured gets cover for his losses, injuries, or damages along with the protection of third party liabilities too.
List of Insurance Companies offering the Third-party insurance
Let us look at the best insurance companies in India that offer third-party insurance under motor insurance for cars. Some of them provide personal accident cover too which the policyholder may opt for.
| Car Insurance Company in India | Claim settlement Ratio | Personal Accident cover option Available or Optional |
| Bajaj Allianz Car Insurance | 68.06% | Yes |
| Bharti AXA Car Insurance | 64.27% | No |
| Digit Car Insurance | 74.30% | No |
| Edelweiss Car Insurance | 74.91% | Yes |
| Future Generali Car Insurance | 66.31% | Yes |
| IFFCO Tokio Car Insurance | 84.04% | Yes |
| Kotak Mahindra Car Insurance | 74.64% | Yes |
| National Car Insurance | 78.55% | No |
| New India Assurance Car Insurance | 78.20% | Yes |
| Oriental Car Insurance | 81.83% | Yes |
| Royal Sundaram Car Insurance | 87.89% | Yes |
| Tata AIG Car Insurance | 75.41% | Yes |
| United India Car Insurance | 96.45% | Yes |
| SBI Car Insurance | 86.10% | Optional |
| Raheja QBE Car Insurance | 100.51% | Yes |
| Universal Sompo Car Insurance | 87.96% | Yes |
The law has been made mandatory that all people who own a car must have third-party insurance which is limited third-party insurance. But it is equally important to have personal protection too so it is always a wise choice to get a personal cover along with the third party cover or you may buy a comprehensive plan for your car which will provide both covers without any confusion.
Common FAQs
- I have the best driving skills and I am 100% confident I won’t hit anyone with my vehicle. Can I skip buying a third-party insurance cover?
The answer is always NO. Third-party insurance cover is not bought according to one’s wishes, but mandatory as per the law passed under the Indian motor vehicle act, 1988. You may drive well but the vehicle you drive may cause damage to other vehicles or people due to a very small mistake which is unpredictable. You will always be thankful for the law that you had a third-party insurance policy handle under such situations. - Can I change my comprehensive policy into a third-party-only insurance cover?
Yes of course you can do that at the time of renewing your existing policy. You may compare the different types of policies and get a suitable plan for your vehicle - What is the punishment if I get caught driving my car without valid third-party insurance with me?
It is always clear as per law that third-party insurance is mandatory for a person who owns a four-wheeler. If you get caught driving your car without one you will be subjected to a fine of Rs.2000/- or/and you may be sent to jail for up to a period of 3 months. If you get caught a second time the fine amount will be Rs.4000/- and will be jailed for 3 months.