Third-party motor insurance cover

Having a third-party insurance cover is a statutory requirement for vehicles in India. We look at its key features and the latest premium rates.

Let’s face it, even if you’re the best driver in the world, accidents do happen. And while motor insurance cannot prevent accidents from happening, it can shield you from the financial impact. Having motor insurance, especially third-party insurance, is critical because it not only eases the financial burden, but it is also mandated by the law.

Since September 2018, having a third-party insurance cover has been made mandatory under Section 146 of the Motor Vehicles Act (MVA), 1988. Not having this can lead to penalties or various other legal implications. Section 146/196 of the MVA stipulates a fine of Rs 2,000 for a first-time offender and a fine of Rs 4,000 for a repeat offender.* Visit the official website of IRDAI for further details.

The premiums for third-party insurance are determined by the Insurance Regulatory and Development Authority of India (IRDAI). But before we talk about premiums, let’s understand the various aspects of third-party insurance. 

What is a third-party insurance cover?

A third-party insurance policy protects the first party or the policyholder from various kinds of liabilities such as accidental, legal, property or financial that arise when a third partyor a person who raises a claim suffers loss or damage caused by the policyholder’s vehicle. It is referred to as a 'third-party' cover as the policy’s beneficiary is someone other than the two parties involved in the contract i.e., the insured and the insurance company.

Since third-party insurance is mandatory in India, most insurers typically include it in their main car insurance plan. But this type of insurance can also be purchased individuallyand when doing so, can be clubbed with a comprehensive vehicle insurance policy. *

What does third-party insurance cover include?

The insurance cover includes coverage against death of or bodily injury to a third party anddamage to any property of a third party. However, it is important to note that a third-party car insurance cover does not offer protection to the policyholder’s vehicle. For that, a comprehensive policy would be required.

Let’s take an example: a policyholder meets with an accident in which their vehicle hits another vehicle, and the latter incurs a damage of Rs 20,000. And there’s some damage to the policyholder’s vehicle as well. In this instance, if the policyholder only has a third-party insurance, the same will cover the repair cost of Rs 20,000 but not the damage to their own vehicle, which can only be claimed under a comprehensive cover. *

Key advantages of third-party insurance

Low-price: Third-party insurance provides a fundamental level of protection to the policyholder at an economical rate. It is verylow-cost and is among the cheapest insurance covers available in India.

Easy availability: Since this insurance cover is required by law, obtaining it very easy. One can purchase or renew this insurance online. Besides, this type of motor insurance is easy to understand and does not involve carrying out time-consuming analysis of product features.

Reduces the financial burden: A third-party motor insurance secures the policyholder’s financial obligation against accidental risks, offering monetary as well as legal assistance.

Eliminates mental stress: In addition to helping the policyholder comply with the law, a third-party cover also offers peace of mind. The unfortunate event of an accident can be financially exhausting but with this insurance, the policyholder need not worry about expenses that may ariseand can be assured of the support from the insurer. *

Third-party insurance premium

In early 2022, India’s Ministry of Road Transport and Highways announced the premium rates for motor third party insurance cover for the financial year 2022-23 (April-March). Effective April 2022, the rates are as follows:

So, if your vehicle doesn’t have a third-party cover yet, getting one could ensure a stress-free driveand protection if a claim is made against you by another person. That said, as a responsible driver, it is recommended to invest in a comprehensive motor insurance policy to protect yourself from the potentially high costs of a large accident claim. A car accident can be costly, even if you’re not at fault. Paying for the repairs or replacement of your vehicle, and potentially going to court, can be a long-drawn-outand pricey affair. That’s why it’s important to buy the right level of car insurance from a company with industry-leading insurance products and a reputation for great claims service like Bajaj Allianz General Insurance. *