Third-Party Insurance for Dummies – Your Guide to Understanding the Policy

Third-Party Insurance for Dummies – Your Guide to Understanding the Policy

Revealed on March 29, 2021. EST READ TIME: four minutes

Third-Party Insurance for Dummies – Your Guide to Understanding the Policy

Driving a car on the street entails a certain quantity of danger. Do you know that as per information offered by the states and union territories to the Supreme Court docket Committee on Street Security, 20,732 individuals died in street accidents within the interval of April to June 2020? A excessive fatality charge when the nation was in an unprecedented, nationwide lockdown merely boggles the thoughts! That is one purpose that street legal guidelines in India mandate that any car being pushed on public roads will need to have a minimum of a 3rd celebration insurance coverage. Regardless of the perfect efforts, a rustic as giant as India is predicted to have street security issues and obligatory insurance coverage is an efficient solution to cut back the impression of such issues.

Attending to know third celebration car insurance coverage

Contemplating the massive variety of street accidents within the nation, the federal government has determined to create an insurance coverage corpus from which they will present compensation to victims of accidents. Such corpus is created by accumulating premium of obligatory third celebration insurance coverage insurance policies.
For those who have a look at the coverage of your car, you’ll find two elements in it – a third-party cowl and an personal injury cowl. This third-party element is the a part of insurance coverage legally required for each car. As per a Supreme Court docket ruling of 2018, when a brand new automobile is bought, a minimal of three years of third celebration insurance coverage should be bought with it. This length goes as much as 5 years in case of latest two-wheeler purchases.

Who regulates third celebration premium costs?

Not like your individual injury cowl, the place your insurance coverage value is calculated in line with add-ons determined by you, third celebration car insurance coverage is charged at a hard and fast value. The job of deciding the worth of third-party motor insurance coverage coverage has been delegated to the Insurance coverage Regulatory and Growth Authority of India (IRDAI).

The IRDAI decides the pricing of third-party insurance coverage coverage primarily based on many components together with engine cubic capability, registration zone. Ideally, the IRDAI revises the price of third-party insurance policies on an annual foundation although this rule just isn’t set in stone. Furthermore, since insurance coverage corporations don’t have any management over pricing, they’re unable to supply any reductions on such insurance policies both.

Protection and options of a third-party insurance coverage coverage

It should be understood that you don’t buy a third-party insurance coverage coverage for offering safety to your individual car. By the very identify, a 3rd celebration automobile insurance coverage for car is supposed to offer safety to individuals who have suffered due to the accident. The next safety options are built-in the third-party coverage:

  • Compensation to members of the family of an individual who died in an accident due to no fault of their very own

  • Compensation to different individuals who had been injured or have turn out to be disabled within the accident due to no fault of their very own

  • Compensation to different individuals whose property was broken within the accident due to no fault of their very own

  • Compensation to different individuals whose car was broken within the accident due to no fault of their very own

In case you are trying to get safety for overlaying damages to your individual automobile, you should get a complete automobile insurance coverage coverage with personal injury cowl. You wouldn’t have any recourse to cowl your individual car restore value underneath a third-party coverage.

What are the advantages of a third-party coverage?

Shopping for a third-party automobile insurance coverage for car has a couple of advantages:

1. It fulfils the authorized mandate of obligatory insurance coverage and thus retains you protected from challans.

2. It’s cheaper than complete automobile insurance coverage coverage and thus might be bought for automobile, that are to be sparingly used or are saved in long-term storage circumstances.

3. It offers you a peace of thoughts that if an accident occurs and you might be ordered by the Motor Accidents Claims Tribunals to pay for damages to the victims; you’ll not have to harm your individual funds. This is essential as a result of tribunal-ordered compensation might be very excessive.


Each automobile proprietor in India ought to have third celebration insurance coverage. Regulated by IRDAI, this fundamental motor insurance coverage sort offers safety to the third-party individual concerned. So, if an accident, you injure a 3rd individual or their property, you’ll be able to present compensation with out having to empty your pockets. Nevertheless, this insurance coverage doesn’t cowl personal injury, and therefore it’s advisable that you just take a complete insurance coverage coverage with applicable add-on covers for extra holistic safety when driving on Indian roads!

Disclaimer: The above data is for illustrative functions solely. For extra particulars, please discuss with coverage wordings and prospectus earlier than concluding the gross sales.

This weblog has been written by:

S. Gopala Krishnan | Motor Insurance coverage Skilled | 40+ years of expertise in insurance coverage business

A veteran in insurance coverage business. S. Gopala Krishnan is a reputation to reckon with within the subject of reinsurance, he has headed the Reinsurance division and has wealthy expertise in different fields of motor insurance coverage. He likes to share his opinion on newest subjects within the insurance coverage business and the way he will help individuals in safeguarding their belongings utilizing insurance coverage merchandise.

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