Unlike most other liability insurances, third-party motor insurance is mandatory as per the Motor Vehicles Act, 1988. Driving an uninsured vehicle will attract a fine and three months imprisonment. The owner must therefore procure third-party motor insurance at the time of purchase of a new car itself.
What is Third-party Motor Insurance?
Popularly known as the ‘act only cover’, third-party motor insurance is liability insurance purchased by the insured, in this case, the owner of the automobile, gets the protection against the claims of another party. In case of an accident, the insured is held responsible and by extension, the insurance company is liable to make payments to the third party that has suffered damages or losses.
Third-party insurance guarantees only a basic level of protection to the insured. Policy covers are usually of two kinds namely, liability coverage policy and property damage policy. In the former policy, costs arising out of bodily injuries to the third party are covered such as expenses for hospital care, lost wages, pain, and suffering caused due to the accident, etc. The property damage liability insurance covers costs of damage/ loss caused to the third-party property of up to INR 7.5 lakh. It covers wreckage of the landscaping, damage caused to a gate or mailbox, etc.
What Eventualities are Covered under such Policies?
The insurance policy will factor in losses caused to both the body of the third party and his/her property. The eventualities covered under the policy are –
- Partial disability
- Permanent total disability
- Property damage
The amounts that will be covered can pertain to – medical expenses, compensation for physical disfigurement, loss of earnings (if the injury renders the third party unfit for work after the accident), etc. The insurance policy will also provide basic legal assistance (including basic investigations and verifications) to the insured.
What is not Covered under such Policies?
- The third-party insurance will not cover the repair of damages to the insured’s vehicle or if the insured has suffered some bodily injury himself.
- In case of property damages, most insurance companies cover a maximum of INR 7,50,000. Any additional costs incurred will have to be borne by the insured.
- Some standard exclusionary clauses under third party motor insurances are –
- The person driving the car was either underage or lacked a valid driver’s license
- The vehicle was being used for any illegal purpose at the time of the accident
- The accident was caused as a result of consumption of intoxicating substances
- The accident was deliberate
- The vehicle is stolen thereafter and is not in the possession of the insured
Let's understand this with the help of an example-Ankit was coming back home after his office party when he suddenly met with a minor accident. His car hit the street light on the road hence he damaged the public property. He got caught by the cops under the offense of drink and drive and had to pay a heavy fine for the same. Moreover, Ankit will not be able to raise a claim for his slightly damaged car as he was drunk when the incident happened. And, drunk driving is a part of an exclusion, under which no claim will be settled by an insurance company.
What are the Steps to Follow When Filing a Claim?
Filing the motor insurance claim might seem like a long-drawn, daunting process, but with a little legal assistance, the process will be completed with ease.
- Step 1: Inform the company about the accident at the earliest. The time stipulated will be provided in the policy document itself.
- Step 2: Meanwhile, the third party would have lodged an FIR at a police station closest to the accident site.
- Step 3: A case will be filed by the third party in the Motor Accident Claims Tribunal to that effect. It is usually filed in the tribunal which has jurisdiction over the area where the accident occurred or it has jurisdiction over the area that the insured resides in. The insured and the insurer will be made respondents to the claim petition. The compensation to be awarded to the third party will be decided by the tribunal – there is no upper limit in case of personal injuries/death and limited liability of insurance up to INR 7,50,000 in case of damage to property.
- Step 4: Once the tribunal conclusively determines the matter, the compensation amount awarded will be paid by the insurer.
- Step 5: A claim form must be submitted to the car insurance company with all the requisite documents. Reconfirm the cover amount.
- Step 6: The claim amount will be paid to the third party directly.
Who is Eligible to File the Claim?
The insured/policyholder is eligible to file the motor insurance claim. It is important to note that the compensation will be provided by the insurer to the third party in most cases, except in the case of the death of the third party, where the compensation will be paid to the deceased’s family.
Purchasing a third-party motor insurance policy offers excellent protection in case of unexpected losses. However, it cannot be emphasized more that the full benefits that the policy has to offer will only be reaped if the claim is made on a timely basis following due procedure. The online means of filing the claim can be resorted to for it will save considerable time and energy of the insured.