Third party insurance refers to a mandatory motor insurance policy that provides financial protection against damages, injuries or death caused to another person or their property by your vehicle.
It is the most basic form of motor insurance and is legally required for all vehicle owners under the Motor Vehicles Act, 1988.
When an accident occurs, third-party insurance ensures that the insurer pays for the losses suffered by the affected party.
However, this policy does not cover the cost of repairing your own vehicle or your medical expenses.
Coverage and Features
This type of policy covers:
- Injury or death of a third person due to your vehicle.
- Property damage to the third party, usually up to ₹7.5 lakh.
- Legal liabilities arising from such incidents.
The third party insurance cost is regulated by the Insurance Regulatory and Development Authority of India (IRDAI) and depends mainly on the vehicle type and engine capacity. Since it offers limited coverage, it is more affordable compared to comprehensive insurance plans.
Legal Importance and Practical Example
Driving without third party insurance in India is a punishable offence, which can lead to fines or imprisonment. Hence, every vehicle owner must have at least this basic insurance coverage.
For instance, imagine your car accidentally hits another person’s vehicle, damaging its bumper.
In this case, your 3rd party insurance will cover the cost of repairs for that vehicle. This ensures you are not personally liable for those expenses.
So, what is third party insurance? It can be understood as a legal safeguard that protects you from financial and legal troubles arising from third-party damages or injuries.
It is essential for road safety compliance and offers peace of mind by covering liabilities that could otherwise lead to significant out-of-pocket expenses.
