All you wanted to know about third-party car insurance

Stories of deaths or serious injuries caused due to rash driving and treacherous road conditions are commonplace nowadays. Now, we really believe in the impeccable driving credentials of all our CarToq readers. But just in case you take your eyes off the road for that split second and hit someone, then the ramifications, needless to say, can be scary.

While you have to be ready– and justifiably so – to face the legal consequences of any accident you cause while driving, having a third party insurance will ensure that you don’t have to worry about the financial liability in such an unfortunate scenario. Also read: How to calculate your car insurance premium

What is third party insurance?

If a person gets physically hurt, or worse, dies following an accident with your vehicle, then your third party policy will require the insurance company to bear the expenses for reimbursing the affected individual. Such protection plans are also commonly known as “Liability” insurance policies. Also read: 10 Points to remember while choosing car insurance

This cover also comes into play if your car causes damage to somebody’s property.

 

Compulsory for all car buyers

Unlike most insurance policies such as health insurance and life insurance that you may decide to have or not, third party cover is compulsory for every car buyer in India. If you fail to get this policy at the time of purchasing your vehicle, then the transport authority would simply not register the car! Also read: 5 tips to reduce car insurance premium

Existing claim limit

In case of injury or death, your car insurer will settle the liability in its totality; there is no upper limit on the compensation the third party can claim. When it comes to property damage, you can choose for a cover ranging from Rs 6,000 to as much as Rs 7.5 lakh. Do remember, however, that you cannot have the TPPD limit changed midway through a policy year. Also read: 6 key top-up covers for car insurance

Premium rates

The following are the premiums you have to pay for buying a third party policy, based on the capacity of the car’s engine –

Engine capacity of car Premium (in Rs)
Not exceeding 1,000 cc 784
Exceeding 1,000 cc but not exceeding 1,500 cc 925
Exceeding 1,500 cc 2,853

 

New claim limits on the way?

At present, the Indian law requires insurance companies to settle third party claims, with no cap on liability. However, a new bill tabled in the parliament has proposed a limit of Rs 10 lakh on compensation for death and a payout of Rs 50,000 for serious injury. If the third party suffers non-grievous injury, then your insurer will have to reimburse him to the tune of Rs 20,000 at maximum, according to the government’s new legislation.

Optional additional covers

This policy also gives you the option of protecting yourself or any other driver of the car  (provided, he possesses a valid driving licence) against the risk of accident. Through a personal accident cover, you can claim as much as Rs 2 lakh from the insurer in the event of a mishap. Also read: Why the insured declared value on your car is important

You can further beef up the policy with covers to protect against the risks of car theft or fire.

Downside

A major drawback of third party policies is that they would not cover loss or damage caused to your own car.

Key exclusions

A third party policy would not help you out financially in case of an accident, if you were under the influence of intoxicating material such as alcohol while driving. Also, the insurer will not bear any liability for loss or damage to a third party if an unauthorised person (e.g. someone without a valid driving licence) was driving your car. Also read: Seven basic things about car insurance