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third party insurance
Third-party insurance is compulsory for all vehicle-owners as per the Motor Vehicles Act. It covers only your legal liability for the damage you may cause to a third party – bodily injury, death and damage to third party property – while using your vehicle. TP cover does not pay for repair of damage to your vehicle. It is, therefore, important to understand its scope in detail.

Third party

“Third party” include everyone (other than insurer and insured), be it a person traveling in another vehicle, one walking on the road or a passenger in the vehicle itself which is the subject matter of insurance policy.

First and Second parties

A third party insurance policy is a policy under which the insurance company agrees to indemnify the insured person, if he is sued or held legally liable for injuries or damage done to a third party. The insurance company and the insured are first and second parties, and any other who suffered death, injury or the person who claims damages against you is the third party.

What covers?

Third-party policy covers only your legal liability for the damage caused to a third party like bodily injury, death and damage to third party property – while using your vehicle. Third party insurance does not cover damages to your own vehicle.

Third party, fire and theft car insurance

Insurance of this type could cover in the event that car is damaged by a fire. This could be accidental or the result of arson.
A third party, fire and theft insurance policy could also cover in the event that car is stolen. Along with this, it may also be covered for damage of car as a result of an attempted theft.

The Beneficiaries

Under the Motor Vehicles Act, third-party insurance is a statutory requirement . It is referred to as a ‘third-party’ cover since the beneficiary of the policy is someone other than the two parties involved in the contract i.e. the insured and the insurance company. The policy covers the insured’s legal liability for death/disability of third party loss or damage to third party property. The victim can claim for compensation under ‘no fault liability’ or ‘fault liability’ of the Motor Vehicles Act 1988. However, unlimited compensation is available only for bodily injury or loss of life. In case of damage to a property, the insurer’s liability is limited .

Mandatory by law, Third party cover protects against the legal liability of accidents. It also covers damage caused to any surrounding property.

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