Car insurance is mandatory in India as per the Motor Vehicles Act of 1988. Along with comprehensive and standalone own-damage policies, third-party car insurance is also a part of the car insurance sector. In this insightful article, we will delve deep into the third-party car insurance policy and see how it differs from comprehensive car insurance.
What is Third-Party Car Insurance?
A third-party car insurance policy offers coverage for any bodily injury, death, or property damage of a third party for which the policyholder (insured) is liable due to an accident. The basic difference between comprehensive car insurance and third party car insurance is that the former offers coverage for the policyholder’s injuries or damages caused to the car, while the latter only protects the policyholder from paying compensation to the third party.
It’s important to note that a third-party policy only offers limited coverage, and policyholders should understand that it is not a complete solution to their car insurance needs.
The Need for Third-Party Car Insurance
As mentioned earlier, third-party car insurance is mandatory in India as per the Motor Vehicles Act of 1988. It is essential to protect any third-party individual or property from damage or injury caused by the policyholder’s insured vehicle. In the event of an accident, the policyholder may be held responsible and liable for the damages suffered by the third party.
Without insurance, policyholders need to pay for the damages from their pockets, which can be substantial. As per the act, the minimum coverage limits for third-party car insurance policies are INR 15,000 for property damages and INR 750,000 for injuries or death.
Types of Third-Party Car Insurance Policies
There are two types of third-party car insurance policies in India.
- Liability Only Policy: A liability-only policy is a mandatory third-party car insurance policy that covers the policyholder’s liability for damages or injuries caused to a third party in an accident. It is a basic coverage plan that does not protect the policyholder from any damage to their own vehicle.
- Comprehensive Third-Party Policy: A comprehensive third-party policy, also known as a comprehensive policy, is an extension of a liability-only policy. It offers additional coverage for damages caused to the policyholder’s vehicle due to theft, fire, accidents, and natural calamities.
The cost of a third-party car insurance policy varies depending on the vehicle’s make and model, location, age, and previous insurance history. It is always recommended that policyholders purchase insurance from reputable insurance providers and thoroughly read the policy terms and conditions before purchasing the policy.
Advantages of Third-Party Car Insurance
- Cost-Effective: Third-party car insurance is generally cheaper than comprehensive car insurance as it offers limited coverage. This makes it an affordable option for those who may not be able to afford comprehensive car insurance.
- Legal Requirements: Third-party car insurance is mandatory in India as per the Motor Vehicles Act of 1988. A third-party insurance policy ensures that the policyholder does not break any legal requirements.
- Saves Money: In the event of an accident or collision, a third-party insurance policy will cover the damages caused to the third party. This helps save the policyholder a significant amount of money that they would have to pay out of their pocket.
Disadvantages of Third-Party Car Insurance
- Limited Coverage: Third-party car insurance offers coverage for only the damages caused to the third party. It does not cover any damages to the policyholder’s insured vehicle.
- No Add-Ons: Unlike comprehensive car insurance, a third-party policy does not offer any add-on coverage options such as zero depreciation, engine protection, or roadside assistance.
- Not Comprehensive: A third-party policy does not offer comprehensive protection against accidents or damages caused to the policyholder’s insured vehicle.
Conclusion
Third-party car insurance is mandatory in India and is designed to protect the policyholder from paying compensation to a third party due to an accident involving an insured vehicle. While it offers limited coverage, policyholders must understand its benefits and drawbacks before buying it. Combined with comprehensive and standalone own-damage policies, third-party car insurance provides a holistic cover for a car owner.
It is always recommended that policyholders purchase insurance from reliable insurance providers and read the policy terms and conditions thoroughly before purchasing the policy. In the end, it is essential to have comprehensive car insurance that offers comprehensive coverage in the event of unforeseen circumstances.
