What is Liability Only Insurance Cover in Motor Insurance

Liability Only Policy is mandatory as per the Indian legal system - it is a Statutory requirement. This policy will cover the third-party/ individual who has been involved in the accident caused by you. When you take a Liability Only Policy, then the loss or damage to your car will not be insured. Liability-only cover very cost effective compared to full coverage where the premium to be paid is higher and the coverage is also very comprehensive. Liability Only Policy is a type of car insurance where the insured and his/her vehicle is not covered but only the Third-party and his/her property.

All vehicles that use the public roads in India should have Third Party Liability Cover. This offers coverage for any loss, damage or injury to others that will hold you legally responsible for. It is advantageous to have a Comprehensive/Package policy since it will cover any damage or loss to the insured vehicle and comes with both “Own damage” and “Liability” cover for the car. Another name for the Liability Only cover is “Act Only cover”.

Liability Only Policy covers any legal liability you may face that occurs out of damage or loss to a third party only - including death, injury, and/or property damage in the event of an accident that involves your insured vehicle. This is following the stipulations laid out by the Motor Vehicles Act, 1988 . Compulsory Personal accident cover for owner-driver is also included. Policy can also be extended to cover various other risks like Personal Accident to occupants of vehicle, Workmen's Compensation to Driver, etc over and above the cover available to him under statute.

Features of Liability Only Cover in Motor Insurance

Types of Vehicles covered

Third Party Liability Insurance can be availed by private vehicles, two-wheelers and commercial vehicles as well. "Liability only" Policies are also applicable on goods carrying vehicles such as public and private carrier, passenger carrying vehicles, etc.

Cover for Third Party Liability

Any legal liability that arises out of total permanent disability, injury, death and/ or damage to property of a third party, arising out of an accident involving the insured vehicle, will be paid for by the insurance provider.

Personal Accident Cover

Most motor insurance providers offer a Personal Accident cover worth up to Rs. 2,00,000 for commercial and private vehicles and for two wheelers the personal accident cover is up to Rs. 1 lac in the unfortunate event of accident, personal total disability or death of the driver/ owner.

Extent of Cover

The extent of cover for third-parties is very comprehensive. Most companies offer a sum of up to Rs. 7.50 Lakhs to cover Third party property damage and Third parties injury. The policy holder can also restrict the amount of cover for damage to Third Party Property to Rs 6,000. This can help the policy holder to reduce the “Liability Only” premium.

Coverage under Liability Only Cover

This policy offers cover for property damage, injury, death, etc. caused to another individual in the event of an accident involving the insured vehicle.

Thus, Liability Only Policy covers:

• Damage to third party property
• Death or bodily injury to a third party
• Permanent Total Disability of the insured vehicle owner/driver
• Accidental Death of the insured vehicle owner/driver

Personal Accident Cover For Owner/Driver

• Permanent Total Disability
• Accidental Death

General Exclusions of Liability Only Cover

• Liability coverage does not apply to damages to the insured car or expenses related to your own injuries arising from the accident
• Death of an individual who is employed by the insured or any other person who is liable for reimbursement under this policy
• Bodily injuries to an individual arising out of the employment to the insured
• Liabilities that arise directly or indirectly from the use of nuclear weapons or materials

Top Insurance Providers that Offer Liability Only Cover on Car Insurance

• HDFC ERGO
• BHARTI AXA General Insurance Company
• United India Insurance Company Ltd.
• ICICI Lombard
• TATA AIG

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017