Essentially, third-party motor liability insurance policy protects you against the legal liability arising from your vehicle’s participation in an accident that led to the injury, death or extensive property damage of an arbitrary third party. Thus, third-party insurance for cars brings you protection against unforeseen circumstances and peace of mind. In most cases, third-party covers offer compensation for a victim’s injuries, pain and suffering, and lost wages. The property damages suffered by a third party are also covered with this insurance. In case of death, the victim’s family can file a claim for compensation.
What is Third-Party Liability Insurance?
Third-party insurance is a form of liability insurance in which the insured purchases a policy for protection against the claim of a third party. Third-party motor insurance policy is a must for automobile owners to protect themselves against the claims of a third party if a vehicle meets with an accident.
Third-Party Motor Insurance Policy Overview
Third-party motor liability insurance is usually part of the main car insurance policy. An important clause, some insurers may also offer this as a standalone add-on cover. This works out well for the penny conscious customer as the cost of a comprehensive car insurance policy is always much higher than a stand-alone third-party cover. In India, third-party insurance for private cars is offered by all car insurers, as it is mandatory, and is usually an essential requirement when people seek out car insurance policies. Again, third-party motor insurance online- signing up for, and/or renewing existing policies is the latest technologically minded update in this insurance speciality.
According to the Indian Motor Vehicles Act, third-party liability cover is a statutory requirement. Aptly, the concept of ‘third party’ arises from the fact that the principal beneficiary of this policy isn’t the original policyholder, or the insurance company, but an affected third party. Herein, this thoughtful policy will cover for the financial liability incurred by the car owner in the unfortunate event of the death or permanent disability of the third party that was impacted by the policyholder’s vehicle in an accident. In principle, IRDA calculates the compensation due to the victim on the earning capacity of the latter.
Motor Third-Party Insurance Premium Rates 2017
Applicable from April 1, 2017, the policy premium rates pertaining to Third-Party Motor Insurance have been updated. The new third-party insurance rates for private cars are as follows-
Motor Third Party Insurance Premium Rates 2017
Applicable from April 1, 2017, the policy premium rates pertaining to Third Party Motor Insurance have been updated. The new third party insurance rates for private cars are as follows-
|Condition Relating to Engine Capacity||Applicable Premium Rate|
|Not exceeding 1000cc||2055|
|Above 1000cc but lower than 1500cc||2863|
* applicable from 1st April 2017
Why subscribe to a third party motor liability insurance? The features and benefits are listed below.
|Condition Relating to Engine Capacity||Applicable Premium Rate|
|Not exceeding 1000cc||2055|
|Above 1000cc but lower than 1500cc||2863|
* applicable from 1st April 2017
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The best ways to save money while renewing car insurance online are:
- Compare online – You must compare all car insurance policies available in the market online. Most insurance providers have the option of renewing the policy online on their registered websites. The respective websites also allow you calculated the insurance premium using an online calculator, thereby making it easier to compare the deals and choose the best one online.
- No Claim Bonus – Do not forget to claim the NCB (No Claim Bonus), which is the discount on premium availed by the car owner if there are no claims made during the policy period.
- Know the value of your car – Knowing your car’s true value helps you save on the premium. By knowing the value and calculation the depreciated value of your car, you can negotiate the premium of the chosen car insurance policy.
- Understand terms and conditions of policy – Read the fine print of the policy carefully in order to avoid any excess payment without your knowledge.
- Ask for high deductibles – Requesting for higher deductibles during renewal of car insurance will help car owners bring down the premium amount.
Why subscribe to a third-party motor liability insurance? The features and benefits are listed below.
Features & Benefits Of Third-Party Insurance Policy For Cars
A standard third-party insurance for cars, takes care of the following in the event of your vehicle’s participation (or causal) of an accident, that resulted in-
- Death or bodily injury to a third party.
- Damage to third-party property.
- Accidental death of the vehicle’s Owner or Driver.
- Permanent Total Disability suffered by vehicle’s Owner or Driver.
Obviously, the benefits arising from such a clause in your car insurance policy are central to your core expectations. In simple words, the following benefits are part and parcel of this feature-
Peace of Mind- Doling out large sums of money to an affected third party, while dealing with this traumatic situation that completely hinges on financial payments could be stressful. A dedicated policy in this regard will save you the mental anxiety.
Hassle Free and Time Saving- With an option to buy or renew third-party motor insurance online, the process is infinitely faster, simpler and completely dependent on your timing and convenience.
Cost Effective- The inclusion of the third-party motor liability insurance component in the overall policy, as either an add-on or part of the core policy, is very cost effective in relation to its intended use.
24x7 Availability- Another advantage of applying for or renewing third-party motor insurance online is that the same is available 24x7, 365 days a year on the online portal. None of the usual constraints as associated with the traditional offline methods, plays a part here.
Thus, as the axiom goes- Third-party motor liability insurance policy is the cake, and the option to pay this third-party car insurance premium online, the cherry on top of it.
Limitations- What isn’t Covered Under Third-Party Motor Insurance Policy
Just as in the main car insurance policy, the standard third-party insurance isn’t applicable under certain circumstances. Listed below are some of these conditions-
- Accidental loss/damage/liability sustained outside the specified geographical area.
- Claims that arise out of any contractual liability.
- The usage of the car that is not in line with the commonly stipulated ‘Limitations as to Use’.
- The vehicle was being driven by someone who isn’t the owner or designated driver.
- Accidental loss/damage incurred by the third party that has resulted from any consequential loss.
- Liability, directly or indirectly caused by radioactive contamination or nuclear weapons.
- Loss, damage and/or liability caused by war, invasion and other warlike operations.
The above list details the most common exceptions. For a comprehensive list, check your policy documents.
Claim Settlement for Third-Party Car Insurance
When there is an accident, both parties are likely to have third-party insurance cover since this is mandatory in India. If a car owner is involved in an accident without any insurance, it could turn out to be a costly mistake even if he or she is not at fault. A comprehensive car insurance policy entitles you to make a claim for the damages caused to you and the third party. If you only have third-party cover, you cannot make a claim for the damages caused to you during an accident. If you are the victim of an accident, you can file for third-party insurance from the insurer of the vehicle that caused the damage. The claim process usually takes the following course.
- Reporting the incident to the police and getting a charge sheet for the accident
- Approaching the Motor Accident Claims Tribunal and filing a case
- Fixing liability after hearing both sides and examining the available evidence
If the tribunal rules in your favour, you get compensated for the damages sustained in the accident. Making a claim after an accident is a complex process that requires some level of expertise. If you are not able to approach the tribunal on your own, you can get the help of a qualified lawyer to plead your case.
Important Considerations When Making a Third-Party Car Insurance Claim
There are certain factors that every claimant must consider before filing for compensation under third-party insurance. They are as follows:
- In an accident, the victim must establish negligence by the opposition party. Hence, it is important to gather evidence before filing for the claim.
- In order to make a third-party claim, the accident must be reported immediately to the police and the insurance company.
- A favourable ruling does not entitle a claimant to get the full amount of settlement that is filed in the claim. The court will decide the right amount suitable for compensation.
- Minor damages to the vehicle can be settled out-of-court as the entire process of filing for a claim is cumbersome and complex. It is better to go to the tribunal only during the case of serious vehicle damage, disability, or death.
- In the case of vehicle damage, the claimant must ensure that the claim is significant. It is not a good idea to forfeit the accrued no claim bonus for minor damages that can be easily fixed.
- Third-party claim can also be made for injuries and income lost during the period of disability following the accident.
- Most insurers subrogate the claim against another insurer only during the case of death or disability. Subrogation is the process through which the insurance company of one party claims reimbursement from the insurance company of the other party for the damages paid.
In Conclusion- In these times of chaotic hurry, unrelenting traffic and a desperate need to speed past, accidents and on-road damage to your vehicle is a common problem. Ensure peace of mind, by investing in a complete protection plan for your cherished set of wheels. With a good third-party motor liability insurance policy, either stand-alone or as part of a comprehensive car insurance package, drive away into the sunset with gusto.
Third-Party Motor Insurance FAQs:
Can I skip the purchase of third-party motor insurance? I really am a good driver.
No. Third-party motor insurance is a compulsory component of your motor insurance policy as mandated by the Indian Motor Vehicles Act, 1988. Also, the fact that you are a good driver doesn’t negate the fact that your vehicle (and you) can be the victims of an accident that was initiated by another vehicle. In such a scenario, you will be thankful that the offending driver is insured with the third-party motor insurance component that you can raise a claim on.
What is a third-party car insurance policy actually?
In simple terms, when your vehicle is the cause of an accident that resulted in the injury/death/damage to third-party property, then the offended party can raise a claim for damages that will be satisfied by your third-party car insurance policy. In this exchange, you will not be getting any monetary benefits.
What is the maximum compensation offered as part of this policy?
In case of bodily injury or death, there isn’t a specific ceiling with regards to the compensation amount. However, in case of damage to third-party property, the insurance company will only account for a maximum of Rs.7.5 lakhs.
I had a bad accident this morning and I wish to raise a claim on the third-party insurance policy. How much time do I have to raise this claim?
In simple terms, there is some breathing space- but quicker is always better. You must start by filing a case with the Motor Accidents Case Tribunal within a span of 60 days from the unfortunate accident. However, there have been instances where the courts have acted upon claims that were registered a year or so from the accident date.
What documents must I submit when raising a third-party car insurance claim?
The documents to be submitted include, copies of FIR (First Information Report) as registered by the local police station, proof relating to the expenses being claimed and report from the surveyor (if damage to property is involved).
Car Insurance Articles:
Relationship between your car’s engine capacity and its motor insurance cost
It is understood that the cubic capacity of your vehicle’s engine has a direct impact on its insurance premium. But have you ever wondered why?
The cost of a comprehensive car insurance policy is the sum of the third-party liability premium, the own damage premium, and the premium for personal accident cover.
The third-party liability premium is a fixed value based on the guidelines provided by IRDA on an annual basis. This is directly proportional to the cubic capacity of the vehicle as well. The own damage premium is based on the IDV of the vehicle, which in turn, depends on the engine capacity.
This page provides you a detailed explanation of how the car’s cubic capacity determines the premium for its insurance.
What is consumables cover in car insurance?
A consumable is a specific substance used in vehicles and it becomes completely unfit for future use after it has been consumed. Materials such as engine oil, screws, bolts and nuts, lubricants, fuel filter, grease, brake oil, and air conditioner gas are all classified as consumables.
If you thought that your comprehensive car insurance policy included coverage for consumables, then you are wrong. The name “comprehensive” is actually a misnomer for the type of car insurance plan in question, because it excludes several incidents from coverage, and usage of consumables is one of them. However, the good news is that almost all insurance companies offer you a consumables cover that you can add to the comprehensive policy to get improved coverage.
Cashless claims in auto insurance
The concept of cashless claims seeped into the realm of car insurance from the health insurance domain. As far as car insurance is concerned, this indicates the ability to get your car repaired at a garage (following an accident) without having to pay for it upfront. The settling of the claim amount is done directly between the insurer and the garage.
However, insurance companies only allow you to avail this facility at selected garages. These service centres are referred to as network garages.
The insurance company will have tie-ups with network garages throughout the country. These workshops also offer you excellent facilities at reasonable costs. So, it is advisable to get your car repaired at a network garage following an accident.
This page educates you on the concept of cashless claim settlement in car insurance and the benefits of choosing network garages.
How to preserve your No Claim Bonus after you sell your car
The No Claim Bonus (NCB) is a very attractive discount that insurance companies offer drivers who stay away from raising claims against the car insurance. So if you were a diligent driver who avoided accidents throughout the year, you will receive an NCB from the insurer. The NCB can then be used to get a discount in premium at the subsequent renewal of policy.
The beauty of the concept of NCB is that you can accrue the bonus over a period of years when you refrain from making claims throughout. When the bonus is accumulated over a timeframe of 5 years, you could even get a discount of up to 50% in car insurance premium!
But what happens to this amazing bonus when you sell your vehicle?
The NCB can be retained by requesting for a certificate/letter from the insurance company. This way you can preserve the NCB for up to 3 years and then use it on the insurance of your next car.
How does cashless garages work?
The concept of cashless claim settlement was first seen in the health insurance domain. It has since been adopted by the car insurance industry, and has rightfully been seeing a surge of acceptance among the policyholders.
Insurance companies have tie-ups with car service stations throughout the country. These workshops are referred to as network garages. If your insured vehicle meets with an accident you can get it repaired at a network garage, almost free of cost. The claim amount will be directly settled by the insurer with the network garage, and you will only have to pay the part of the claim amount corresponding to deductibles and depreciation.
This facility is particularly useful when you are involved in an unpleasant incident such as an accident at the time of financial difficulties. Also, the network garages will be the most popular workshops in the locality, offering premium services to customers. The cashless facility will hence, ensure that you have a smooth claim settlement experience. At the end of it you can be assured that your vehicle will be as good as new!
News About Third Party Motor Insurance
Third Party Insurance Premiums Increased by 10% to 40%
With revisions in car insurance premiums rolled out by the IRDAI, third party liability cover will be more expensive in 2016-17. As per the law, under the Motor Vehicles Act, all owners must insure their vehicles against third party damages. Existing premium rates will be increased by up to 40% starting from April 1st 2016. The rise in premiums is calculated by the Insurance Regulatory and Development Authority of India after taking into consideration the rise in cost inflation which has increased by 5.57% in 2015-16.
Revisions are also based on the number of claims made and the loss ratio of insurers. For four-wheeler private vehicles, there will be a 40% hike in premium for small cars below 1,000 cc and B segment cars between 1,000 cc and 1,500 cc. For sedans exceeding 1,500 cc, the premiums will be hiked by 25%. Two-wheelers will see a hike of 10% to 25% depending on the displacement. However, premiums for superbikes above 350cc will be reduced by 10%.
30th March 2016
Market Pricing for Third Party Motor Insurance Premium Required
General Insurance companies in India are planning to place a request with the IRDA to de-tariff third party motor insurance premium. This is being done because insurers have to now compulsorily provide insurance for high-risk vehicles. This resolution to approach the IRDA comes after the regulator's move to remove the pool which contains high-risk vehicles, which also had to be given coverage. According to the Insurance Amendment Act, passed last year, it is mandatory for insurers to offer minimum motor third-party insurance to make sure all vehicles have cover. In India, motor insurance comprises of two segments - third party cover and own damage cover. The change in tariffs for the third party segment is required as with this component insurers are making huge losses. With the IRDA proposing to increase the third party motor premium from this April by 30%, insurers might still feel it inadequate to cover their losses.
29th March 2016
45% of Car Users in Bengaluru Consider Third Party Insurance as a Factor When Purchasing Car Insurance
A survey on motor insurance in Bangalore has revealed that among car owners only 45% take into consideration third party insurance cover when they purchase a motor insurance policy. Among bike owners this number is 48%. This survey was conducted on bike and car owners between the ages of 25 and 35 years. It was conducted by ICICI Lombard. Car owners of first-hand sedans, hatchbacks and SUVs with price range of Rs. 18 lakh and upward was considered. Two-wheeler owners of 100cc-250cc vehicles were also considered.
16th February 2016
IRDA orders 3rd party cover for e-rickshaw drivers
IRDA (Insurance Regulatory and Development Authority) has made third party insurance cover compulsory for any battery functioned three wheeled motor vehicles because the odds of an accident victim availing the due compensation have increased. After e-carts and e-rickshaws were included under the Motor Vehicles Amendment Act of 2015, the ombudsman has trodden on the gas by introducing e-rickshaws (not more than 4000 watts) under third party motor insurance. So far this was applicable only to two wheeler and car insurances. Mr. Mukesh Kumar, the Executive Director of HDFC Ergo General Insurance agrees with this step. There are over one lakh battery functioned three wheelers as of now hitting the Indian roads and lanes. The insurance watchdog has specified that e-rickshaws carrying up to six commuters would have to buy a cover with a premium of INR 1066 plus additional fees. Spokespersons promised some reductions to three wheelers to make sure of quicker compliance.
18th November 2015
IRDAI Fixes Third Party Motor Insurance For E-Rickshaws And E-Carts
Insurance Regulatory and Development Authority of India (IRDAI) has always maintained a fixed premium for third party motor insurance cover for e-carts and e-rickshaws at INR 1066 to INR 3257 based on the kind of automobile. The Motor Vehicles Amendment Act, 2015 fetches the e-carts and e-rickshaws beyond its specified zone. According to the alteration, e-carts or e-rickshaws are sole purpose motorized vehicles that do not exceed 4000 watts. Having three wheels for fetching goods or commuters, as the case may be, for rental or recompense. Also, IRDAI has stressed that two wheelers taking passengers on rent and will have to shell out premium between INR 702 and INR 1615 based on the engine capacity.
5th November 2015
Motor Problem of General Insurers
General Insurance Companies are facing a serious problem with respect to their motor insurance portfolio as they are being forced to pay for third party accidents to previous policy holders, which have to be recovered later. Losses are said to run up to Rs. 500 crore annually. Although motor own-damage policy is not mandatory, Third Party motor insurance is necessary in India.
Companies are also required to pay for those who were in accidents the year they were insured but did not subsequently renew the policy. Although the company can recover the money, the process is fraught with difficulties.
Because the pricing for non-life insurers is regulated in third party segment, they are facing losses in motor insurance and is expected to increase from FY16 as it has become compulsory for insurers to have a minimum percentage of the TP business underwritten. An increase in premium between 14 and 108% from the 1st of April was proposed by IRDAI - Insurance Regulatory and Development Authority of India.
Although the Third Party pool for commercial vehicles was removed and a declined risk pool was set up, problems continue to rise. For motor insurance segment, the combined ratios have been between 150% and 160%. There are many reasons because of which losses are currently high such as incomplete Third Party insurance coverage for the vehicle owning population and inadequate increase of price in the motor TP segment.
Although a road safety and transport Bill has put forth a maximum liability of Rs. 15 lakh for road accidents under the TP insurance cover, lobbies that represent truck drivers and customers groups are against this.
29th September 2015
Advertising Bullseye- Ad Companies Pay for your Car/ Ad-Hoarding
Ever wondered what driving around an advertising hoarding would feel like? Now, thanks to some ingenious ad agencies, you actually can. A unique concept called ‘advertisements on wheels’ is gaining rapid popularity in India wherein ad companies help you buy a car of your choice (paying upto 75% of the on-road price), share in the monthly EMIs, assist with the car insurance and other formalities, in return for using 60-70% of your car’s surface area for poster advertising. Prospective car owners are taking this condition sportingly, after all, in today’s world of steep prices and inflation, any financial help is gold. Are you game?
28th July 2015
Government to set a cap on third party motor Insurance compensation amounts.
The Road Transport and Highways Minister, Nitin Gadkari announced that the Ministry of Road Transport and Highways (MRTH) was going to fix a maximum limit of Rs 15 lakhs for the compensation paid to third parties in cases of death in road accidents. The Ministry would be replacing the existing the Motor Vehicle Act 1988 with the Road Transport and Safety Bill (RTSB) to implement this measure. Currently, the law stipulates that the compensation that is to be paid has to be calculated using a formula and should be pronounced by a court. The formula considers the income, age and the number of dependents of the victim to decide the amount. The compensation money generally paid for third party motor insurance claims range between Rs 5 lakhs to Rs 2 Crores.
The new bill which might be introduced in the Monsoon session of the Parliament, will make vehicle owners opt for third party insurance, thereby improving income for insurers. Insurance companies can also benefit from this move as the cap will reduce their liabilities with regards to third party compensations.
12th June 2015
GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017