Why You Should Get Third Party Insurance

India roughly accounts for just about one percent of the global vehicle population. However, it accounts for about six percent of the total global road accidents⁽¹⁾. In 2019, there were around 1.55 lakh deaths due to road accidents in India. Another 4.39 lakh people were injured. The majority of the accidents involved two-wheelers, which also dominate the Indian automotive industry in terms of production and sales. Speeding, driving under alcohol influence, hit and run cases, and general traffic violations resulted in almost 80 percent of the accidents being the driver’s fault. Citizens aged between 18 and 45 years were involved in about 70 percent of the road accidents⁽²⁾.

According to the latest available figures from Ministry of Road Transport and Highways, the number of registered vehicles per 100 km of road length in India increased from 2,408 in 2006-07 to 4,286 in 2016-17⁽³⁾. With the ever-increasing vehicle population and comparatively slower expansion of road network, it has been a challenge for the government to control accidents happening on Indian roads.

While safe and responsible driving is the best way to protect oneself from road accidents, motor vehicle insurance comes in handy in case of an unfortunate event, which may or may not have happened due to your own fault. In India, third-party insurance is also mandatory for all motor vehicles, a statutory requirement under the Motor Vehicles Act, 1988. 

Why Do You Need Third-Party Insurance?

Accidents on roads usually affect two sets of people – you and a third party. Real life is not like video games where road accidents are casual happenings and damage to third parties is just a collateral with rarely any consequences. When you are involved in a mishap with the third party in real life, you may have to bear the financial and legal consequences arising out of the same, no matter whose fault led to the accident. Having car insurance in such a case protects you against any legal or financial obligation that may arise from damages caused to a third party. 

While this insurance does not cover the vehicle damage or injury to the policyholder, the insured’s legal liability in event of death or disability of third-party is covered. It also covers damage to third-party vehicles and property due to an accident. While there is no limit on the liability covered for injury or death, Insurance Regulatory and Developmental Authority of India (IRDAI) guidelines limit the cover for third-party property (usually the third party’s car) damage insurance at Rs 7.5 lakh.

One of the major differences between a third-party insurance and a comprehensive insurance is the range of protection that is offered to you and your vehicle. While a third party cover provides protection only against liability of claims by the third party involved in a mishap, a comprehensive cover also protects you and your vehicle.

How Does Third-Party Insurance Work?

Making a third-party insurance claim is quite simple and involves just a few steps, mostly on part of the third-party. For the purpose of making a claim, the insured person is the first party, the insurance company is the second party, and the injured person involved in the mishap, who is claiming the damages, is the third party. To be compensated for damages, the third party needs to file a claim against the policyholder, or the first party. An FIR is registered with the police with the details of the accident and a case filed with the Motor Accidents Claim Tribunal. The tribunal then directs the insurer to pay the compensation amount to the victim. Not only the damage to the third party’s vehicle and property is covered by this insurance policy, but any injuries or accidental death is also covered.

With Bajaj Allianz General Insurance, getting third party car insurance for your car or two-wheeler is convenient and hassle-free. You can complete the whole process online from submitting an application to paying the premium. 

Three Benefits of Third-Party Insurance:

1. Legal Cover and Monetary Help

No matter how carefully you drive on the road, and how many precautions you take, accidents can happen - sometimes not even due to your fault. However, the legal and financial implications of such mishaps can be huge. You may have to pay for damage to the other person’s car involved in the accident, or treatment of the third-party driver. There can even be legal proceedings filed by the third-party. However, a third-party insurance cover, you are covered against all such eventualities. This is the most crucial feature of third-party insurance policy.

2. Affordable Coverage

Affordability is one of the biggest benefits of a third-party insurance cover. The premiums for such policies are quite low when compared to comprehensive policies. That, of course, means less protection, but it does ensure you have done the minimum required due diligence to be able to take your vehicle out on the road. Also, the cost of a third-party car insurance policy is fixed by IRDAI basis the engine’s cubic capacity of the car. So unlike a comprehensive policy, the rates for a third-party insurance policy do not change from one insurer to another.

3. Ease of Process

A third-party car insurance policy is a simple plan compared to a comprehensive policy. This enables easy purchase and quick car insurance renewal as you can even buy these policies online from the comfort of your home. Since it is a simple and straight-forward plan, it can be purchased without giving much thought and going into analysis like insurance requirements and adequate coverage. Third-party car insurance policies also bring peace of mind when dealing with an unfortunate traumatic situation. Instead of worrying about unforeseen expenses, you can instead focus on the immediate relief from stress and coping up with the incident.

One must remember, however, that a third-party cover only provides partial protection. It does not cover theft or damage to your own car. Moreover, a number of useful add-ons like zero depreciation, roadside assistance and accessories cover - which are available on a comprehensive cover - are not available on third-party cover which only offers personal accident add-on. Hence, it is highly recommended that if you can afford it, you should go for a comprehensive insurance policy that also has third-party cover inbuilt. Having said that, one situation where going for only a third-party cover makes sense is towards the end of the vehicle’s life whose current value is deemed to be too low to be viable to renew comprehensive insurance policies year after year. But since a third-party cover is mandatory under law, don’t drive without it!

Sources:

[1] https://www.statista.com/statistics/746887/india-number-of-fatalities-in-road-accidents/#:~:text=Notably%2C%20while%20India%20has%20about,the%20global%20road%20traffic%20incidents.

[2] https://ncrb.gov.in/sites/default/files/ADSI-2019-FULL-REPORT.pdf

[3] https://morth.gov.in/sites/default/files/Ministry%20Annual%20Report_2019-20.pdf