Third Party Motor Insurance

The third-party motor liability insurance policy protects the person against the legal liability arising due to the collision of his vehicle in an accident that led to the injury or death of other person or a massive vehicle's damage of the third-party. Thus, the third-party insurance for cars brings you protection against the unforeseen circumstances. In most cases, this insurance cover offer compensation for injuries, pain, lost wages and death of the victim.

Third-Party Liability Insurance

It is a form of liability insurance in which the insured purchases a policy from the insurer for the protection against the third-party claim. It is must for the automobile owners to protect themselves against the claims of a third party, in case they deemed responsible for the accident.

Overview of Third-Party Motor Liability Insurance Policy

It is usually a part of the primary car insurance policy and a vital clause. Some insurers may also offer it as a separate add-on cover, often known as,'Act Only'Insurance. It is a beneficial option for the penny conscious customer as the cost of a comprehensive car insurance policy is always higher than an individual third-party cover. In India, third-party insurance for private cars is provided by all the insurers, as it is a mandatory requirement for the people who are buying car insurance policies. The third-party motor insurance online- signing up and renewal of existing policies is the latest tech update in the insurance sector.

According to the Indian Motor-Vehicles Act, the third-party liability insurance cover is the statutory requirement for all car owners. The concept of ‘third-party’ arises from the fact that the primary beneficiary of the policy isn’t the insured or the insurer, but the affected third-party or person, as the former two are the nominal beneficiary. Therefore, this policy will take care of the financial liability of third-party incurred by the car owner in an unfortunate circumstance of the death or permanent disability in an accident. The IRDA determines the compensation amount for the victim, based on the earning capacity of the accused.
The premium rates for third-party insurance are fixed by the IRDAI, which are the same for all the insurance companies. However, the amount paid as a premium by the policyholder may differ according to the engine capacity of the car. For example, while a Hyundai i10 owner has to pay around Rs 1,500, for a Toyota Altis, the annual third-party insurance premium would be around Rs 5,000. The authority reviews the fixed third-party insurance rate on a yearly basis, and the adjustments are made, as required.

Features and benefits of third-party motor liability insurance are listed below.

This insurance covers several aspects of third-party:

• Death or injury to a third-party.
• Damage to the property of third-party.
• The accidental death of the third-party vehicle’s owner or driver.
• Permanent Total Disability suffered by the owner or driver of third-party's car due to the accident.

The advantages arising from such a clause in your car insurance policy are-

• Peace of Mind-  Allocating large sums of money to an affected third party, while dealing with the traumatic situation could be stressful. A dedicated policy in this circumstance will save you mental anxiety.
• Hassle Free and Time-Saving- With an option to buy or renew third-party motor insurance online, the process is infinitely faster, more straightforward and utterly dependent on the timing and the convenience
• Cost Effective- The addition of the third-party motor liability insurance aspect in the motor insurance policy, either as an add-on or as the part of the core policy, is very cost effective about the intended use.
• 24x7 Availability- Another advantage of applying or renewing the third-party motor insurance online is that it is available on the site for 365 days a year and 24/7. The constraints which are associated with the traditional offline methods are not applicable here.

 

Limitations of third-party motor insurance policy

The standard third-party insurance is not applicable under the specific circumstances which are listed below:

• Any accidental loss/damage or liability sustained outside the specified geographical area.
• The Claims that are a part of any contractual obligation.
• If the usage of the car is not compliant with the stipulated ‘Limitations to Use.’
• The vehicle was driven by someone who is not the owner or the designated driver then any accidental loss/damage incurred by the third-party will not fall under the ambit of third-party motor insurance.
• Liability, directly or indirectly damage caused by radioactive contamination or nuclear weapons.
• Loss, damage and liability caused by the war, invasion and other warlike operations.

The above points have listed significant exceptions. For a comprehensive list, check the policy documents.

Claim Settlement Process

When there is an accident, both the parties are required to have third-party insurance cover which is mandatory in India. If the car owner is involved in an accident without any insurance cover, it could turn out to be a costly affair, even if the person is not at fault. The comprehensive car insurance policy facilitates the policyholder to claim the damages caused to him or her and the third party. On the other hand, in a third-party cover, the policyholder cannot claim the damages caused to him or her or the vehicle during the accident. The victim of an accident can file for a third-party insurance claim from the insurer of the car that caused the damage. The claim process usually takes the following steps:

• Report the incident to the police and getting the charge sheet for the accident.
• Approach the Motor Accident Claims Tribunal and file the case.
• The jury of tribunal hear both sides and examines the available evidence.
• If the tribunal makes a judgment in your favor, you will get compensated for the damages sustained in the accident. Claiming an accident is a complicated process and requires some level of expertise. If the victim is not able to approach the tribunal directly, the person can get the help of a qualified lawyer to plead the case.

Essential factors to consider while making a third-party car insurance claim:

• For making the third-party claim, the accident must be reported immediately to the nearby police station and the insurance company by the victim as evidence is required for the initiation of the claim filing process.
• The claimant may or may not get the full amount of settlement that is filed in the claim as the court will decide the right compensation amount.
• Minor damages to the vehicle should be settled out-of-court as the entire process of filing for a claim is a mammoth task. It is advisable to go to the tribunal or special court only during the case of massive vehicle damage, disability, or death of the victim.
• The lawsuit should be either filed in the tribunal having jurisdiction over the area where the accident has occurred or in the tribunal with authority in the area where the claimant or the defendant resides.
• Though there is no cap on the liability covered for the injury or death; however, the cover for a third-party property (usually the car) damage is limited to Rs 7.5 lakh.
• The court then listens to both the sides, testify the evidence, and fixes the liability. If the decision is in favor of the victim, the person will get compensated for the loss incurred by the other party.

The process of Subrogation

In subrogation, one can request the insurer to subrogate a case only if a party has the ‘third party’ policy. It is up to insurer or the insurance policy to accept or reject the request of subrogation. The insurer takes this decision only after the requisite investigation. Subrogation is the legal right of an insurer to pursue the third-party who has caused the insurance loss to the insured, especially in case of permanent disability or death. Here the insured has to sign a document giving the subrogation right to the insurer to get reimbursed for the loss of a person. The insurance company then approaches the insurer of third-party to recover the amount of the claim paid to the victim for the loss. However, there are very few cases of subrogation.

When both parties have comprehensive covers

Unless it is the case of death or disability even if both the parties have comprehensive insurance, the insurer will not help in filing a claim against another insurer, i.e. the insurer will not agree to subrogate the case. Generally, the Motor insurers have 'know check-for-knock agreement' in which they agree to bear the charges for the damages to vehicles insured with them as long as it is covered under ‘own damage,’ regardless of the insurer who is liable to pay. The responsible insurer settles the vehicle repair and the medical expenses in this case, and no claim will be recovered from the insurer of the responsible vehicle.

Important points to consider while filling the claim form

• Visit the garage
  It is advisable to call the insurer first and then take the car to the nearest network garage for the settlement process. The form can be available with the authorized dealer or garage, or you can download it from the website of the insurance company. Also, obtain the documentary proof from the garage in which you have sent the car for repair. It will give a fair estimate of the expenses incurred to gauge the amount covered in the insurance policy.
• File the claim form:
  Mention all details related to the car damage. Also, mention the details of car repair bills. If your claim includes the medical expenses due to injuries from the accident, you may be asked to sign the waiver to allow the car insurance company to access the medical records.
• Watch out before signing the final claim settlement form:
  The actual claim amount that is expected by the claimant may be different from what the insurer agrees to pay. Make sure that the final amount is adhering to the policy benefits for which you paid the premium. Few insurers deduct the salvage cost as well, so try to avoid such deductions. Also, the insurers apply their standard rates of repair, and not the actual garage cost is borne by the claimant, thus increasing the share of loss, which should be avoided. Make sure to ask the representative of the insurance company to explain every line of the claim sheet. Keep a record of the final settlement form with you for the future reference.

FAQs

Q1. I met an unfortunate accident this morning, and I want to file the claim on the third-party insurance policy. What is the span to raise the claim?
Start filing the case with the Motor Accidents Case Tribunal within the span of 60 days from the unfortunate accident. However, there have been the instances in which the courts have acted upon the claims that were registered a year after the accident date.
Q2. What happens if I get caught driving without the valid third-party liability motor insurance policy?
As per the Motor Vehicles (Amendment) Bil, 2016 which was approved by the Lok Sabha, a person driving without the valid insurance policy can be imposed a fine of Rs.2,000.