Taking a Third Party insurance is a statutory requirement under the Motor Vehicles Act, 1988. In this insurance, the main beneficiary is neither the policyholder nor the insurance company but pretentious third party. However, the insured’s legal liability is covered in event of death/disability of third-party loss or damage to third party property.
Why do we need Third Party Insurance?
Despite being a legally mandatory, third party insurance comes in handy in event of your vehicle being involved in an accident with another vehicle, right from permanent/ total disability to death person can be a possibility. Here’s where your third party insurance comes into play. Insurance Regulatory and Developmental Authority of India (IRDAI) guidelines limit the Third Party Insurance cover to Rs 7, 00, 000.
There are two types of Third Party Insurance:
Third Party Liability Car Insurance
Third Party Liability Two-Wheeler Insurance
Benefits and Features of Third Party Insurance:
Legal Cover and Monetary Help
The legal liability of the insured person is covered under third-party insurance policy in event of temporary or permanent disability or demise of a third person or damage to the third party property. Third Party Insurance policy takes care of legal liability and financial burden of the policyholder despite the policyholder or the insurance company being a direct beneficiary. This is the most crucial feature of Third Party Insurance policy.
Ease of Process to Purchase Third Party Insurance
Third Party Insurance policy is easy to purchase/renew. You can also purchase or buy these policies from the comfort of your home by buying the policy online. Therefore you can easily access it anytime.
Beneficial to the Policyholder in case of Unfortunate Event
The coverage offered under Third Party Liability Insurance is evidently a cost effective protection to the policyholder in the unforeseen event of liability towards a third party due to their disability or demise. Whether taken as a main policy or as an Add-on, it benefits you fully. Although the income of the insured is considered.
What’s Not Covered?
Third Party Insurance just like main Motor Insurance has certain exclusion which are discussed below.
Accidental damage/liability outside a geographical boundary.
Claims that arise from any liability due to contracts.
If any individual other than the policyholder was driving the automobile.
Liability which might arise from nuclear liability or a radioactive contamination
Liability which might arise from war or any other war like situation.
Third Party Insurance vs. Comprehensive Cover
One of the major difference between the third party insurance and Comprehensive insurance is the range of protection that is offered to you and your vehicle. A comprehensive cover protection cover for you and also your vehicle whereas a third party cover provides cover only for the protection of liability of claims of the third party. Strengths and weaknesses of each of them depend on the underlying factors. I is necessary to understand them in order to compare, analyze and decide which one to choose.
Value of Car:
If the value of car is less it makes sense to go for the third party motor insurance since getting the car repaired would prove to be less costlier than paying hefty premiums that are charged under Comprehensive Cover. However, if your car is brand new then the comprehensive cover is the better option.
Third-Party Insurance covers any damages caused to the third party vehicle, injuries caused to other people and also any damages to the property of third person. Some Insurance Companies charge extra for third-party insurance coverage but it does not provide cover against damages to your own vehicle.
A Comprehensive cover is definitely more expensive than the third-party cover as it provides cover for various damages/injury/loss.
Which Insurance Cover is Right for You?
If you are in need of insurance policy that covers you and your vehicle then you should go for the comprehensive car policy as it has many of the provisions of the third-party insurance as well. It is more expensive than the Third Party insurance policy. Therefore choosing among them boils down to your specific requirements. In case of your car being a brand new car, it’s preferable to go for Comprehensive Cover that provides maximum protection to your vehicle. You can choose Add-On covers like engine protection to ensure the vehicle is well protected. Standalone Third Party Insurance cover is more suitable for vehicles which are no longer in prime condition.
It is said that It is better to be safe than Sorry. Accidents happen unexpectedly and can heavily on your finances. A slight variation in the exclusions which vary a bit depending on the vehicle insurance policy should not dissuade people from taking up either Comprehensive cover or the Third Party Insurance which meet their requirements.