Since vehicle insurance is compulsory in India, people often stick to minimal coverage. It is cheap and provides equivalent protection. In insurance terminology, the person buying car insurance or the Insured is the first party, the Insurer or the insurance service provider is the second party and any other person who gets indirectly connected is the third party.
Third-Party insurance provides protection in the case for the third party where you are guilty of an accident. It covers below-mentioned liabilities:
- Third-party damages: It covers the expenses incurred by you as compensation for damages caused by an accident to the property of a third party. In this, financial help is given to the third party on your behalf.
- Third-party injury: It covers any bodily injury caused to the third party in an accident where you were guilty. It includes any other person on the road or the one with you when you were driving.
- It provides you legal and financial protection in the event of death or injury of the third party.
The minimum third party vehicle insurance generally provides cashless claims settlement. However, there are certain conditions where the insurance company is exempted from providing benefits. These are as follows:
- Any damage to your car and/or any injury caused to you are not covered under this insurance. In simple words, this insurance covers the third party property as well as the owner of that property.
- In case the vehicle is rented or is purchased for hire.
- In case of the damage is done because of any sport like racing or in case of the speed test.
- When the drivers do not have a driving license for whatsoever reason.
- In case the vehicle is used for commercial purpose and the owner does not have a permit for the same.
- Car insurance Policy taken gets Lapse because of nonpayment of Premium or it gets expired.
- The third-party refuses to make car insurance claims for damages.
The features of third-party insurance are as follows:
- In India, as per the Motor Vehicle Act, 1988, it is mandatory to own such insurance.
- Minimum third party vehicle insurance is an inexpensive method and can cost as low as Rs. 100.
- The person who purchases car insurance is the first party, the insurer is the second party and the Beneficiary is the third party.
- It does not provide any protection in case of loss to the first party as it covers only third party losses and damages.
- The compensation from car insurance claims is always paid to the third party and not the insured.
- The car insurance policy provides legal and financial protection.
- Since car insurance is a legal requirement, the amount of premium remains constant.
- It is protection for the mistake on part of the first party.
Minimum third party vehicle insurance can be ideal for low-income people like college students and young earner.