Find out why third-party insurance is necessary

Posted on: Feb 8, 2022 | | Written by:

Find out why third-party insurance is necessary

Published on February 8, 2022. EST READ TIME: 3 minutes

Road accident numbers in India are the highest in the world, while insurance adoption is notoriously low. But the fact remains that availing third-party insurance is a must for every vehicle owner, so that in case of an accident, where the vehicle owner is at fault, the third-party or the victim can be duly compensated. Basically, if you end up hurting a third-party person or property, the insurance policy covers you financially and compensates the victim. To know more about this kind of policy, read on.

What is a third-party insurance policy?

This is a mandatory, fundamental policy which provides coverage against any injury done to a third-party person or damage to their property. The first party is the policyholder, and the second party is the insurer. The third-party is any other individual. This third-party insurance policy covers your financial obligations to a third-party person, if you cause bodily harm or injury to the person or damage their property as a result of an accident with your car.

How does third-party insurance work?

A claim is filed by the third-party person. If it’s your fault, your insurer would offer financial compensation to the third-party person as per the cost of treatment or repairs. The insurer will appoint a surveyor to assess the value of the damage and cost of repairs. Then the claim is settled, saving you the burden of carrying out these obligations from your own pocket.

Why third-party insurance is important?

Third-party insurance relieves car owners of the potential financial burden of having to pay for someone else’s damage. And it works both ways – if you’re at fault, you can keep your finances intact. And if you’re the victim, you need not pay out of your own pocket for the repairs or treatment cost. This ensures that everyone on the road is financially protected against accidents, as they can happen without warning, and sometimes, through no fault of any party.

So, what is required in the aftermath of an accident?

If you’re involved in an accident, inform your insurer immediately. You may need to file a FIR, depending on the circumstances of the accident. But make a note of the following, to provide your insurer with ample information:

• Accident date and time

• Description of the accident

• Details of insurance policies, of both parties

• Injuries sustained, if any

• Damage done to the vehicle

• Personal details of witnesses, if any

• Photographic evidence of the site

With this information in hand, it becomes easier for all parties to complete the required formalities, and for the insurer to disburse the compensation amount. Once the claim is filed, the insurer appoints a surveyor to assess the estimated cost, based on which the claim is settled.

Are there any exclusions?

Well, third-party insurance only provides coverage against any injury or damage to a third-party person or property. It covers physical injury, disablement, and death, and damage to the other person’s vehicle and property.

What it does not include is the damage done to your own vehicle. For that, you would need a comprehensive car insurance policy which has built-in own damage and third-party components. Furthermore, the insurance claim will be rejected if the accident is a result of drunken driving or any other illegal activity. That includes an underage driver, driving under the influence of drugs or other intoxicating substances, driving down the wrong side of the road, or a deliberate intention to cause an accident. It also does not cover theft, for which you would need a comprehensive policy.

Conclusion

While third-party insurance is mandatory for the greater good of the driving population at large, it is almost always recommended to avail a comprehensive insurance policy, as it not only comes with a built-in third-party insurance component, but also helps in paying for damages incurred by your own vehicle. You do not have to depend on the other person’s third-party policy to repair your vehicle. Moreover, given the lack of third-party coverage in India, it makes for a wise decision to opt for comprehensive insurance.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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