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When you have third-party car insurance, it protects you if you're responsible for an accident. This type of car insurance covers the cost of damage or injury to other people, vehicles, or property. Unlike comprehensive insurance, which covers your car, third-party car insurance focuses solely on covering the other party involved in the accident.
If you're at fault in an accident, third-party car insurance will pay for repairs to the other vehicle or medical expenses for those injured. It doesn’t cover any damage to your car, but it helps you avoid significant expenses from third-party claims. Third-party car insurance is often a legal requirement and provides essential financial protection. By understanding how it works, you can ensure you're adequately covered for any accidents that might happen.
What Is Third-Party Car Insurance?
Third-party car insurance refers to a type of coverage that protects you in the event of an accident where you're at fault, covering the damage or injury caused to another person, their property, or their vehicle. In this arrangement, the insurance company compensates the third party (the person affected by the accident), not the policyholder’s vehicle.
Unlike comprehensive car insurance, which covers damage to your vehicle as well, third-party insurance only protects the other party involved in the accident. It’s typically a legal requirement in many regions, ensuring that drivers are financially responsible for any harm they may cause to others while on the road. This type of insurance is generally more affordable, making it a popular option for those who want basic coverage that meets legal standards without extra costs.
What Does Third-Party Insurance Cover?
As per standard policy wordings, a third-party insurance plan includes:
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Bodily injury or death of a third party
Compensation is awarded based on the decision of the Motor Accident Claims Tribunal (MACT). There is no upper limit on the compensation for injury or death, ensuring adequate support to the affected party. -
Damage to third-party property
The maximum compensation for third-party property damage is up to ₹7.5 lakhs. -
Personal Accident Cover for the Owner-Driver
An inbuilt benefit offering ₹15 lakhs coverage in case the owner-driver suffers death or permanent total disability in an accident.
How Accident Claims Are Handled Under Third-Party Insurance?
Third-party accident claims follow a well-structured process, guided by Indian motor laws. Here’s how it works, step-by-step:
Scenario 1: When the Insured Vehicle Causes Damage to a Third Party
If the insured vehicle causes damage to another person or property, the following steps must be followed:
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Collect Evidence at the Scene
Photographs or videos of the damage, injuries, number plates, and the surrounding area should be taken. This acts as proof for both legal and insurance proceedings. -
Note the Details of the Affected Third Party
Name, address, and contact number of the affected individual(s) should be documented. -
Inform the Insurer
The insurance provider must be informed as soon as possible to initiate the claim process. -
File an FIR
An FIR must be registered at the nearest police station, especially in case of injuries or fatalities. -
Legal Proceedings in MACT
The third party will approach the Motor Accident Claims Tribunal to seek compensation. The tribunal evaluates the case, the extent of damages, and decides on the compensation to be paid. -
Insurer Processes the Claim
Once the tribunal passes its judgment, the insurer pays the awarded amount directly to the third party on behalf of the insured.
Scenario 2: When the Insured Is the Victim of an Accident
If the insured’s vehicle is damaged or someone inside it is injured due to another party’s fault, they must:
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Gather Evidence
Capture images/videos and record the vehicle number of the offending vehicle. -
Note the Details of the Opposite Party
Including name, contact, and insurance information. -
File an FIR
Report the incident at the nearest police station to initiate legal proceedings. -
Approach the Tribunal
File a claim against the owner and insurer of the offending vehicle in the Motor Accident Claims Tribunal. -
Await Tribunal Verdict
The tribunal examines the case and orders compensation accordingly. The insurer of the offending vehicle pays the awarded amount.
Key Points to Remember While Filing a Third-Party Claim
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FIR is Mandatory: An FIR serves as the legal foundation for the claim. It is especially crucial in the case of bodily injury, death, or property damage.
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Insurer Notification: Informing the insurance company immediately helps initiate the claim process quickly and efficiently.
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Third Party Involvement Is Crucial: The affected party must provide valid documentation, including medical bills, repair estimates, and witness statements.
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Out-of-Court Settlement Option: For minor incidents, the vehicle owner may choose to settle the matter directly with the third party without going to the tribunal, saving time and legal expenses.
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Unlimited Liability for Injuries: In case of death or injury, there is no upper limit on the compensation, making the insurer liable for substantial payouts.
What Is Not Covered?
While third-party car insurance offers essential protection, it has defined exclusions. These include:
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Damage to the insured's vehicle.
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Accidents caused under the influence of alcohol or drugs.
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Accidents involving drivers without valid licenses.
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Damages or accidents occurring outside India.
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Use of the vehicle for purposes other than those declared (e.g., racing, reward-based transport).
These exclusions help ensure that the policy is used responsibly and only in applicable situations.
Premiums for Third Party Insurance
Premiums for third-party car insurance are regulated annually by the Insurance Regulatory and Development Authority of India (IRDAI). They vary based on the engine capacity of the vehicle:
Car Premium Slabs
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Up to 1000cc: ₹2,094
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1000cc–1500cc: ₹3,416
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Above 1500cc: ₹7,897
Bike Premium Slabs
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Up to 75cc: ₹538
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75cc–150cc: ₹714
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150cc–350cc: ₹1,366
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Above 350cc: ₹2,804
The standardisation ensures transparency and fairness, making third-party car insurance widely accessible. Companies like Tata AIG offer competitive premium rates, ensuring that you can obtain affordable and reliable coverage to meet your legal obligations while offering peace of mind on the road. With access to over 5,900+ network garages for cars and 4,500+ network garages for bikes, Tata AIG makes sure that you're never far from quality service whenever you need it.
Why Timely Policy Renewal Matters?
A lapse in third-party car insurance could mean:
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Exposure to high financial liabilities.
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Legal penalties include heavy fines.
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Rejection of claims.
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Risk of vehicle seizure.
Renewing your policy on time keeps your coverage active and avoids any legal or financial pitfalls.
Conclusion
Third-party car insurance is not just a legal formality; it is a foundational element of responsible driving. It protects the insured from legal liabilities and ensures rightful compensation to accident victims. The process of making a claim is structured and fair, backed by the Motor Vehicles Act and judicial oversight through MACT.
A reliable car insurance policy with robust third-party coverage simplifies the claims process, offers peace of mind, and shields drivers from unpredictable liabilities. For those seeking trusted coverage, companies like Tata AIG offers compliant and convenient solutions to protect against third-party risks and ensure smooth claim settlements.