All You Need to Know About Third-Party Liability Insurance

What is Third-Party Liability Insurance?

Third-party liability insurance for your car is the most basic and mandatory insurance required by law that provides coverage for liabilities arising from third parties in an unforeseen event involving your vehicle. The insurance provides financial protection under the following scenarios:

• Death or bodily injury caused to a third party (including a pedestrian)
• Third-party property damage
• The third-party liability car insurance covers both financial and legal liabilities arising from third parties.

The vehicle owner should have third-party liability insurance with a minimum of three years of validity.

Why is Third-Party Liability Insurance Compulsory?

The Motor Vehicle Act, 1988, makes it compulsory for every vehicle owner to have third-party liability insurance that can cover the injury or damage caused to a third party other than the insured. Failing to have third-party liability insurance can result in the following consequences:

• For the first offence: fine of INR 2,000 or three months of imprisonment or both;
• For the subsequent offence: fine of INR 4,000 or three months of imprisonment or both

If the policy is nearing the date of expiry, it is important for every vehicle owner to renew it on time to ensure continuity of the coverage.

Scope of Coverage in Third-Party Liability Insurance

The third-party liability car insurance provides coverage for the following:

Death or bodily injury to a third party

If your car is involved in an accident that causes the bodily injury or death of a third party (another driver, passenger or pedestrian), then the policy covers:

• Expenses incurred for the treatment
• Legal compensation
• Death benefits are to be awarded to the dependents as per the Motor Vehicle Act

Damage caused to third-party property

In an accident, if your car causes damage to another vehicle, home or any third-party property, the policy covers the following:

• Replacement or repair cost
• Compensation to be awarded as per the court

Legal Liabilities

If the third-party claim case goes to the tribunal or the court, the policy covers the legal expenses.

General Exclusions in Third-Party Liability Insurance

The following are the general exclusions in the third-party liability car insurance:

1. Loss or damage caused due to driving under the influence of alcohol or intoxicating substances
2. Loss or damage caused due to electrical failures and mechanical breakdown
3. Damage to your own vehicle (insured vehicle) and personal accident coverage
4. War, invasion, civil war or nuclear weapon usage
5. Damages caused by natural calamities like earthquakes or floods

Cost of Third-Party Liability Insurance

The cost of third-party liability insurance is decided by the IRDAI (Insurance and Regulatory Development Authority of India) and determined based on the cubic capacity of the vehicle. The following are the current premium rates for the third-party liability insurance for private cars:

• New private cars – single premium for three years

• Engine capacity < 1000 CC: INR 6,521
• Engine capacity > 1000 CC, but less than 1500 CC: INR 10,640
• Engine capacity > 1500 CC: INR 24,596

Benefits of Third-Party Liability Insurance

The following are the benefits of third-party liability car insurance:

1. Having third-party liability insurance mandated by law keeps you compliant
2. It gives you financial protection against the financial and legal liabilities arising from third parties
3. Third-party liability insurance is affordable and cheaper.
4. The coverage against the potential liabilities gives a sense of security and peace of mind.

Though third-party liability insurance is mandatory by law, it is wise to have comprehensive car insurance coverage for complete financial protection. At Jio Insurance Broking, you can go through comprehensive car insurance policies from various car insurance providers, get a quote and compare them on their cost and features to make the right choice.

Conclusion

To sum up, third-party liability insurance is a legal compulsion to cover liabilities arising from third parties involved in a car accident and compensate the loss or damage caused to them. Understanding why it is mandatory, what is covered and what is not covered in the third-party liability insurance helps you in the claim process. Stay insured and compliant to safeguard against potential liabilities.