Despite being legally mandatory, many vehicles on Indian roads still run without valid insurance. The insurance regulator, IRDAI, recently revealed that over half of the vehicles in the country lack proper
coverage. This has raised concerns, especially given the number of road accidents reported every year.
Third-party motor insurance is often seen as mere paperwork to dodge fines, but it actually plays a vital role during accidents. It helps cover financial and legal responsibilities if someone else is injured or their property is damaged due to your vehicle.
Why Is Third-Party Insurance Needed?
Third-party motor insurance is the most basic cover required under the Motor Vehicles Act, 1988. It protects vehicle owners against liability if their vehicle causes injury, death, or property damage to others in an accident.
Here, a “third party” means anyone other than the vehicle owner or driver. This could include pedestrians, people in another vehicle, or passengers in another car or two-wheeler.
Niharika Singh, Executive Director, Marketing, IFFCO-TOKIO General Insurance, said, “This policy does not cover damage to the insured vehicle itself. Its sole purpose is to compensate the affected third party,” as quoted by Moneycontrol.
In simple terms, third-party insurance covers:
– Injury or death of another person
– Damage to someone else’s property
– Legal costs linked to accident claims
Without this cover, the vehicle owner has to pay compensation out of their own pocket. In serious cases, this amount can reach several lakhs or even crores. “Given India’s high accident rates, this cover plays a crucial role in ensuring that accident victims receive financial support, while shielding vehicle owners from crippling liabilities,” Singh told Moneycontrol.
How Does It Help After An Accident?
When an accident causes injury to a person or damage to property, third-party insurance steps in to manage the situation. The insurer handles claims according to legal regulations, relieving the vehicle owner from managing the process alone.
Money protection: Covers compensation that could otherwise drain personal savings
Legal help: Handles court cases, claim talks, and paperwork
Legal safety: Keeps the owner safe from penalties for not following insurance laws
“In essence, third-party insurance ensures that an unfortunate accident does not turn into a long-term financial and legal crisis for the vehicle owner, while also ensuring justice and support for accident victims,” Singh said.
How Much Do You Need To Pay?
Many people think insurance is expensive, but third-party premiums are fixed by rules. Prices are the same across insurers for basic cover.
For two-wheelers, yearly premiums usually range from Rs 500 to Rs 3,000. For private cars, the cost is around Rs 2,000 to Rs 8,000 per year. “These premiums provide unlimited liability cover for third-party injury or death, as decided by courts. The contrast is stark: a few thousand rupees a year can protect against liabilities running into crores,” explained Singh.
Are Long-Term Policies Available?
For new vehicles, long-term third-party policies are also offered. These usually cover three years for cars and five years for two-wheelers. They can be bought alone or along with full insurance at purchase.
Singh added, “These long-term covers provide regulatory compliance and cost stability over multiple years, often at a cumulative rate that is lower than renewing annual policies each year.”
However, vehicle owners should carefully read their policy details and keep in mind that third-party insurance does not cover any damage to their own vehicle.
