5 Things to Know about Third-party Motor Insurance

Every vehicle registered with RTO is required by law to have valid car insurance. When purchasing a car insurance policy, you have two options: comprehensive or third-party. You can choose any, but a motor third-party liability insurance policy is the minimum legal need. It is one of the most affordable insurance policies available while yet meeting regulatory standards.

 Let's take a look at the top 5 things you should know about third-party auto insurance.

Third-party Car Insurance

According to Motor Vehicles Act of 1988, a third-party Car Insurance add on covers is a must-have. So, in the section below, let’s understand about the different things you should know about third-party car insurance:

• The Concept of Third-Party Motor Insurance

Third-party motor insurance is the kind of insurance under which the insurer has to indemnify the insured person if he is held legally liable for damages or injuries done to a third party. For example, if you are to crash into another car and the accident turns out to be your fault, then your liability to the driver of the other car will be covered. However, you would not be able to make a claim for damage to your own vehicle.

• Inclusions within a Third-Party Motor Insurance Policy

Third-party car insurance covers you against the following:

• Bodily injury to a third party
• Accidental death of a third party
• Damage to third-party property
• Permanent total disabilities of a third person

Damage or destruction of any property due to an accident is covered up to a specified amount which varies from insurer to insurer.

• How Does Third-Party Motor Insurance Policy Work?

Application: The application for a third-party claim can be made against the vehicle owner by the victim, the owner of the damaged (third-party) property, or the legal envoy of the deceased.

Police complaint: After completing the third-party claim application, an FIR must be filed with the police. Quote the following information in the FIR: 

1. Registration number of the vehicle involved in the case of an accident
2. The licence number of the driver
3. Name and contact details of witnesses, if any.

Claims tribunal: Once done with the FIR process, the claimant should file a case with the Motor Accident Claims Tribunal. Note that it should be under the jurisdiction of the area where the petitioner resides, or the accident occurred.

Documents: The documents, including a copy of the FIR and original records of expenses incurred, must be offered to authenticate the damages/loss.

Cover amount: The total compensation is borne by the insurance firm once the court decides on the amount.

• Where and by Whom Can the Claim Be Filed?

The first and foremost step is informing your insurance provider about the accident through any possible means of communication. The next step is approaching the insurer with a claim application. An application for search can be submitted by the injured, the property owner or the injured's legal representative.

The insurance company would then process the claim, which could include taking the arbitration to the tribunal to ensure adequate compensation for the cost of treatment of the injured or the loss of life.

• Exclusions: What Falls Outside the Third-Party Motor Insurance Coverage?

There are specific scenarios and incidents that are not covered by third-party motor insurance. For instance,

• The third-party motor insurance does not cover the damage to your vehicle. This means if you collide with someone's vehicle, injuries and damages sustained by you or your car will not be covered by third-party motor insurance.
• Compensation for the damage cannot be claimed more than once. For this reason, victims should not expect their insurance provider to compensate them for any amount not awarded by the court.
• By the existing structure of the tariff product, the insurers’ legal liability is constrained to a maximum sum of Rs 7.5 lakhs, i.e., the vehicle owner would bear any amount more than Rs 7.5 lakhs.
• The insured victim needs to stick to the terms and conditions of the insurance company while filing a third-party claim. Any claim that doesn’t fall under the company’s terms and conditions will not be covered.

Summing It up

Understanding the concept of third-party coverage, knowing what is included in the policy, familiarising oneself with the claim process, knowing where and how to file a claim, and being aware of the exclusions are essential for every vehicle owner in India. This helps policyholders handle unfortunate scenarios confidently and get the maximum benefit possible. Remember to carefully review and adhere to the terms and conditions of the insurance company to ensure proper coverage.

FAQs

1. Should I make small claims?

When calculating repair costs, it is important to take into account the No Claim Bonus and vehicle insurance. If the No Claim Bonus exceeds the estimate, avoid small claims and pay for the damage yourself.

2. For how long is my motor insurance policy valid?

Your car insurance policy cover remains in force for 12 months from the date of commencement (or as otherwise shown on your policy schedule). 

3. What if my vehicle is being driven by someone else at the time of the accident?

Liability follows the vehicle. So, even if someone else is driving your bike or car with your permission, your vehicle's insurance will still apply. In such a scenario, the liability insurance of the driver will typically cover any losses that exceed the limits of your own insurance policy.

4. What happens if I change my car or two-wheeler in the middle of the year?

A vehicle insured under a policy can be substituted by another vehicle of the same class. The premium will be adjusted on the basis of the remaining duration of the policy from the date of substitution. Inform your insurance company that you are changing your car or two-wheeler. Ask them how it is going to affect your premiums. Call your insurance company to update your policy according to underwriting guidelines. 

5. I am selling my car, can I transfer my policy to the new owner?

When selling your car or two-wheeler to someone else, the buyer can transfer the vehicle's insurance policy into their name. To do so, the buyer must apply for a transfer of insurance with the insurance company within 14 days of the transfer and pay the endorsement premium for the remaining policy period.