• Vaishnavi Rastogi

Motor Third Party Liability Insurance

Under the provisions of The Motor Vehicles Act, 1988, any motorized vehicle operated on public roads should be insured against third party liability.

Motor Third Party Liability Insurance covers the damage to third party health and property caused by an accident for which the driver or the owner of the car is responsible.

A policy may be taken out by the owner of a vehicle or by a person authorized by the owner on behalf of the owner.

Main Features:

  • Apart from financial support, this insurance covers the legal liability of the insured in case of property damages, physical injury, or death of the third party along with a lawyer’s help.

  • Since the insurance provides narrow coverage, the premiums are quite low and affordable.

  • These are one-year policies (Short-term policies) that have to be renewed each year. IRDAI has directed the insurance companies to offer 3-year insurance for new cars and 5-year insurance for new two-wheelers.

  • Premiums do not depend on the insured vehicle’s value as it is impossible to know what the liability would be.

Comparison with Motor Own Damage:

  • The Own Damage insurance covers any damage caused to your vehicle occurring due to an accident or any natural calamity whereas the third-party cover covers liability for injuries and damages to others for which you are responsible.

  • The premiums for Motor Own Damage insurance are higher than Third Party Liability insurance, hence it is mostly taken for luxury or expensive cars.

  • A wide range of add-on covers like nil depreciation cover is available in Motor Own Damage but no such add-on covers are available in Third Party Liability insurance.

Coverage provided:

  • Bodily injury/Death- It covers costs resulting from injuries to a person. Generally, expenses like hospital care, lost wages, pain and suffering due to the accident are covered in these injuries' costs. The compensation is decided by the Motor Tribunal court. 100% of the compensation is provided in case of death but 50% of the compensation is provided in case of a lost limb or partial blindness.

  • Property damages- It covers costs resulting from damages to or loss of property. The payments are made for the replacement of landscaping and mailboxes, also compensation for loss of use of a structure in case of an accident. The insurer covers up to 7.5 lakhs for property damages in the case of cars and 1 lakh in the case of two-wheelers.

  • Personal Cover- If included, the insurance provides compensation to the owner/driver of the insured car in case of disability or if the driver dies due to the accident.

Risks Excluded from Coverage:

  • It does not offer a claim if you have faced any injury or there are any damages to the insured vehicle.

  • Drunk driving, the invalid license of the driver, accidents outside the specified geographical region, and unauthorized usage of the vehicle are some of the cases where coverage is not provided.

  • Deliberate accidental loss is a loss arising out of an accident or event that was intentional.

  • Consequential losses, or, damages which are consequence of a certain action resulting from the policyholder or a third-party (whether intentional or by accident).

  • The policy would also not cover any contractual liability that a policyholder may have towards the insured asset, that is, the car.


Written by: Vaishnavi Rastogi (An Actuarial Student)

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