Finance

How Does Third-Party Vehicle Insurance Work?

How Does Third-Party Vehicle Insurance Work?

If you’re a vehicle owner, you might be familiar with “third-party insurance.” It is insurance coverage for a vehicle that protects you from any liability to a third party due to an accident involving your vehicle. 

But what is third-party car insurance, and how does it work? Well, in this post, we will get to learn everything about third-party vehicle insurance.

Whether you’re a new driver or experienced on the roads, it’s essential to understand all the aspects of the type of cover you’ll have in case of an accident.

What Is Third-Party Vehicle Insurance? 

Third-party vehicle insurance is the most basic type of cover available to car owners, but it can offer complete protection to third parties if an accident occurs.  

This type of cover protects the driver if they are involved in an accident that was their fault. If a third-party vehicle is damaged or another person is injured due to your actions, the insurer will pay for their losses, not yours. 

It is essential to understand that you will be responsible for any damage you cause to another vehicle, medical bills, or losses to a third party if you have this insurance. That’s how third-party insurance helps you avoid facing those costs.

How Does It Work? 

Third-party vehicle insurance works by covering the damages and injuries caused to a third party in case of an accident. For instance, if you hit another vehicle and the driver or any passenger is injured, third-party insurance will cover the injured party’s medical expenses and other damages. The third-party insurance policy also covers damages to the other vehicle involved in the accident. 

It’s important to note that third party insurance does not cover any damages or injuries caused to you or your vehicle. That means if you get into an accident and your car is damaged or injured, you will have to bear the expenses yourself. That is why it’s always recommended to have a comprehensive insurance policy that covers you and third-party liability. 

In India, third-party vehicle insurance is mandatory by law, as per The Motor Vehicles Act of 1988. It’s a legal requirement for all car owners to have third-party insurance. The purpose of this law is to protect third parties from any financial losses in case of an accident. You could face hefty fines and penalties if caught driving without third-party insurance. 

How Much Coverage Does Third-Party Policy Offer? 

For most vehicle owners, the key question is how much coverage a third-party policy provides. The answer will depend on your provider and the policy you have purchased. Some policies offer comprehensive protection that covers all third-party losses, while others may limit their coverage to a specific limit. 

Though third-party vehicle insurance cover holds limited coverage, it is still essential to cover this given coverage: 

  • Property Damage: Most of the 3rd party property damage will be covered only under third-party cover of INR 7.5 lakh.
  • Third-Party Bodily/Death Injury: Under the third-party policy, an insurer offers 100% compensation for the death of the third party & 50% indemnification for partial blindness and loss of limb. A court of law will decide this compensation sum for the third-party liabilities. 

Hence, third-party vehicle insurance does not protect you against uninsured drivers. To do this, you should add a comprehensive insurance policy, which can offer additional protection against those who are driving without coverage.

Conclusion

To conclude, third-party vehicle insurance is crucial to owning a car. It safeguards you from any legal liabilities and ensures that any third party involved in an accident with you is protected from financial losses. So, if you’re a car owner, get a third-party insurance policy that meets your needs and budget.

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