Third-Party Insurance: A Mandatory Car Insurance

Third-Party Insurance: A Mandatory Car Insurance
Third-Party Car Insurance

Third-party insurance is a type of car insurance that is mandated by law and covers any financial and legal obligations to third parties as a result of an accident involving an insured vehicle. When a third party suffers a fatality, or an injury, or has their property damaged, third-party car insurance provides reimbursement.

What is third-party insurance?

As a type of liability insurance, third-party insurance is coverage that the owner of a car, motorcycle, or other vehicle purchase to defend themselves from third-party claims. The insured of third-party insurance is obligated to make up for any losses or damages incurred by the third party in the event of an accident.

Why is third-party insurance necessary?

Car owner requires third-party insurance because it protects them against legal obligations, unintentional obligations, or third-party property damage brought on by unfortunate occurrences. Additionally, the policyholder is relieved of the responsibility of covering medical costs incurred by a third party as a result of accidental injuries or death. The compensation provided in cases of third-party liabilities is based on the third party's age, income, occupation, and status. If the insured vehicle is older than five years, third-party liability insurance is strongly advised.

How does third-party insurance work?

In the event that a third-party insurance policyholder suffers an accident, the insurer will pay for the cost of repairing the third party's property. As a result, it minimizes the financial load on the policyholder. In the event of an accident, the insured shall immediately contact the insurance provider before submitting a claim.

As soon as a claim is filed, the insurance company appoints a surveyor to inspect the damage and validate the projected cost of repairs. Following completion of the verification, the insurance settles the claim.

What does third-party insurance cover?

The liabilities resulting from third-party accidental damage, injury, or death are covered by third-party car insurance. The specific coverages of third-party car insurance are listed below:

Third-Party Liabilities

Any harm or losses brought on by the insured car to a third party during an accident are third-party liabilities. The owner of the covered car is liable for the losses because the insured car was responsible for the accident. Insurance against third parties' legal obligations protects against:

  • Property damages
  • Car damages
  • Accidental bodily injuries
  • Accidental death
  • Personal Accident Cover

Personal Accident Cover 

Under third-party car insurance, motor insurance companies also provide personal accident coverage to the owner-driver of the insured vehicle. The owner-driver of the car is given compensation as part of this coverage in the event that they become disabled or dies as a result of the accident.

What is not covered under third-party insurance?

Regular third-party insurance is not applicable in all circumstances, just like with the basic motor insurance plan. A third-party car insurance policy does not cover the following issues:

  • Own Damages
  • Drunk Driving
  • Invalid License
  • Outside Geographical Limit 
  • Unauthorized Usage
  • Contractual Liability 
  • Undesignated Driver
  • Substantial Loss
  • Nuclear Perils
  • War

Features of third-party car insurance

  • The primary benefit of third-party car insurance is that it pays out for harm a covered vehicle causes to a third party.
  • The cost of third-party insurance is really low.
  • It is the least expensive and required type of insurance that a policyholder can get.
  • It protects the policyholder from unexpected financial and legal obligations in the event of accidental involvement.
  • The insurance pays for accidental injuries, fatalities, and third-party property damages.
  • This insurance also provides personal accident coverage for the car's owner and driver.

Difference between comprehensive and third-party car insurance?

  • The type of coverage it provides is the main difference between third-party and comprehensive insurance. Comprehensive car insurance will also cover your personal damages, unlike third-party insurance which only protects you against third-party losses and damages.
  • Third-party car insurance is worthwhile if the value of the car is low, whereas comprehensive car insurance is advantageous for luxury or expensive cars because it provides protection from all damages.
  • While comprehensive insurance is optional and can be chosen at the car owner's choice, third-party insurance is required under motor laws.
  • Third-party insurance does not offer add-on covers, but comprehensive car insurance does offer a variety of add-on covers such as return to invoice cover, nil depreciation cover, etc.

Cost of third-party insurance on average

A third-party insurance coverage covers property damages up to $9120 and physical injuries or death of a third party (as determined by a court of law). Comprehensive car insurance packages provide coverage for third-party injury and death as well as damage to the covered vehicle.

Key benefits of third-party insurance

There is always a chance of an accident when driving on the roads. Third-party insurance provides the insured with the appropriate protection throughout that period in the following ways:

  • Provides Financial Assistance
  • Covers Legal Liabilities
  • Fulfils Legal Mandate
  • Cost-Effective Policy
  • Ensures Mental Peace

Final word

The third-party insurance cover, also known as the liability cover, is a policy that protects the owner or driver of the car against any legal liability, accidental liability, financial loss, or property damage, as well as medical expense coverage in the event that a third party is injured or even died as a result of the car. It is preferable to purchase third-party vehicle insurance if the value of your car is low because it is simple and inexpensive to manage repairs for any damages that may have been made.