Third Party Car Insurance

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A third-party car insurance policy is an insurance cover that protects you against all major third-party legal liabilities. It provides financial coverage to an insured person due to the involvement of his own car in an accident. This car insurance policy provides coverage for death, disability, injury, or sizeable property damage to a third party of up to INR 7.5 lakh. Your insurance company will compensate for the repair and hospitalization costs of a third-party accident. 

Thus, with the help of third-party car insurance, you simply need not worry about legal as well as financial liabilities arising from a third-party accident. 

Why Third-Party Car Insurance is Important? 

Under Motor Vehicles Act,1988, it is mandatory for every vehicle owner in India to have at least third-party insurance. Third-party car insurance is also termed as ‘acts only’ cover that helps in reducing a car owner’s worry. With the help of third-party car insurance, you will get a bare minimum insurance coverage your car needs to have in order to ply on India’s roads. 

So, suppose, if your car meets with an accident and unfortunately, there is a case of third-party death, here comes third-party car insurance into the picture. It rescues you both legally as well as financially. Apart from offering the basic coverage benefits, it is also affordable to have.

Features & Benefits of Third Party Car Insurance

The following features and benefits are offered by a third-party car insurance policy.

  • Third-Party Legal Liabilities: The policyholder will get a third-party legal liability cover in case of accidental loss or damage to a third party person. The insurance company will compensate the third party person in case of injury, disability, or death. 
  • Offers Financial Support: The third-party car insurance policy takes care of the financial and legal burden of the insured. This policy provides financial assistance at every step. Thus, the car owner need not worry at all as all the third-party accidental expenses will be covered.      
  • Affordable to Purchase: Buying this policy is really cost-effective as far as its premium is concerned. It would be easy on your pocket to pay the premium of this policy because of its affordable price. 
  • Easy to Buy Online: The process of buying this policy is quick, simple, and seamless. You can easily purchase this policy online in just a few hassle-free steps. 
  • Sense of Protection & Peace of Mind: Once you have this policy, it gives you a sense of security as well as peace of mind. You are now financially as well as legally protected with this policy. 

What is Covered? 

Your third-party car insurance policy offers the following coverage.  

Third-Party Liabilities:

  • Accidental Death: If you accidentally ran over your car on a third party person, which leads to his untimely death, your insurance company will compensate for the same. The compensation will be provided to the victim’s family on your behalf. 
  • Accidental Bodily Injuries: If a third party person is accidentally injured by your car, your insurance company pays the treatment cost of the injuries.   
  • Accidental Disability: In case, an accidental disability happens to the third party person from your car, your insurance company will bear the hospitalization and treatment cost of the same.  
  • Property Damage: In case a third party person’s property such as a boundary wall or shop got damaged, your policy covers the damage related to the same.  
  • Car Damage: If you accidentally hit a third party person’s car with your own car, your insurance policy pays for all the damages caused to the third party’s car.  

Personal Accidental Cover for Owner: According to IRDA, it is mandatory to opt for personal accidental cover. The owner of the car will get a defined cover of INR 15 lakh. Personal accidental cover will be issued in the name of the car owner. However, the cover can be claimed only when the owner possesses a valid driver’s license. This cover pays for accidental death or disabilities.
In case of death of the owner, the insurance company will pay the nominee an entire amount of the cover, while in case of permanent disability the compensation is as follows:

Coverage ForPercentage of Compensation
Loss of 2 limbs or 2 eyes or 1 limb or 1 eye100%
Loss of sight or 1 eye or 1 limb50%
Permanent Total Disability100%

What is Not Covered?

No Coverage for Damages to Own Car: Your basic third-party car insurance policy does not give you coverage for your own car. Yes, if your car is damaged in a third-party accident, you cannot recover the damage cost of your car from your insurance provider. 

No Protection Against Theft/Fire: Your third-party car insurance policy will also not cover the clause of theft or fire. In case your car gets stolen or catches fire, your insurance company will not compensate for that. 

Zero Add-on Covers: A third-party insurance policy does not have a wide range of add-on covers. Add-on covers help to expand the coverage of your car and help you to save money in the long run. Zero depreciation car cover, no claim bonus protection for cars, roadside assistance cover, conveyance benefit, etc will not be included in your third-party car insurance policy. 

How to Compare Third Party Car Insurance Plans Online

When buying third-party car insurance online, it is recommended that you know the basic parameters on the basis of which you can select the best car insurance online. Here’s a list that you may refer to when comparing car insurance plans online:

Cover

The cover is the most significant factor when looking for the best third-party car insurance policy. The table given below illustrates the coverage offered by the third-party car insurance policy.  

Benefits Offered

Third-party Car Insurance
Damages to a third-party personAvailable 
Damages to a third-party vehicleAvailable 
Damages to third-party propertyAvailable 
Personal accident coverAvailable 
Cover on Repair Cost to own car from an accidentNot Available
Cover on Repair Cost to own car from natural/man-made disastersNot Available
Theft of own carNot Available
No Claim BonusNot Available
Add-OnsNot Available
Customization of coverageNot Available

The premium of Car Insurance

The Insurance Regulatory and Development Authority decides the premium of the third-party insurance cover. It is more or less the same for all insurance companies. However, the premium amount may differ depending on the engine capacity of your vehicle. For example, an owner of a Hyundai i10, will pay a different premium, while the annual premium for Toyota Altis would be different. IRDAI, on an annual basis, reviews the third-party insurance rates and makes changes accordingly.

Incurred Claim Ratio

The incurred claim ratio is the ratio of net motor claims incurred in a particular year as compared to the total premium collected in that year. If the incurred claim ratio is very low, it means that the premium charged by the company is higher than the claims paid and if it is more than 100%, then the profitability of the company is affected. 80-90% ratio is a good one.

The Network of Garages

It is important for you to check the network of garages that come under your third-party car insurance policy.  The more garages, the better it is. 

Third Party Car Insurance Premium Rates 2020

SI.NOCategoryDescription of Vehicle ClassPremiums w.e.f.2020 (in INR
1.Third Party Car Premium For Private Cars
2.Less than 1000 CC2,072
3.More Than 1000 CC but less 1500 CC3,221
4.More Than 1500 CC7,890

Third Party Car Insurance Claim Process

When it comes to third-party car insurance claims, the process is quite simple and hassle-free. You just need to follow all the guidelines carefully issued by your insurance company. Take a look at the necessary steps below that you need to follow for a smooth claim journey.  

Step 1: Inform the motor insurance company 

You need to inform the insurer as early as possible about the accident and the claim. You can do this through the agent or through the company customer care of the insurer. The company may ask you to take the car to a network garage. Depending on the policy that you have, they may arrange for a pick-up or ask you to arrange one.

Remember, all details of the accident - how, when, and where need to be told to the company.

Step 2: Lodge an FIR

The FIR needs to be registered, furnishing all the required details. Mention each and every important detail of the accident to the police officials. Do not forget to mention Driver’s License Number, witnesses’ name, and contact details, if any. And, also just carry a copy of the FIR and the original record of expenses incurred by the victim. 

Step 3: Inspection by the Company

A company surveyor/inspector would visit the site/garage to make an assessment of the damage. A report would be prepared and submitted by him to the company.

Step 4: Get the Cover Amount

There is no pre-decided limit for claiming third-party insurance. The insurer compensates the full amount decided by the court in its final verdict. However, IRDA limits the coverage for property damage up to INR 7.5 lakh. 

The following documents will be required when you request for third party car insurance claim:

  • Duly filled Policy Claim Form
  • Company Policy Papers
  • Copy of Driver’s License
  • Copy of RC of the car
  • The ID of the claimant
  • Copy of the MCR

Best Third Party Car Insurance Companies in India (2020)

CompanyPercentage of Incurred Claims (2018-2019)
HDFC Ergo General Insurance76%
TATA AIG General Insurance78%
ICICI Lombard General Insurance75%
Royal Sundaram General Insurance85%
Bharti AXA General Insurance77%

How to Renew Your Lapsed/Expired Third Party Car Insurance Policy Online

It is easy to renew your third-party car insurance online in just a few simple steps. 

You simply need to visit the official website of your insurance company.

  • Log in to your account
  • Enter the basic details asked
  • Read the terms and conditions
  • Renew the existing policy by making a payment

Quick Tip: You can also have an option to choose a different insurance company while renewing your existing policy. However, the premium amount will remain the same as it is already set by IRDAI. Moreover, you can check out the services offered by a different insurer, in case you are not satisfied with your existing one. If you want complete coverage you can opt for a comprehensive car insurance policy.

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