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Everything About Third-Party Liability Insurance

Updated On Oct 15, 2023

Third Party Liability Insurance

Navigating through the myriad of insurance policies available can be a daunting task. It’s crucial to understand the nuances of different insurance types to make informed decisions. One such indispensable insurance is Third-Party Liability Insurance, a mandatory cover for vehicle owners in India.

What is Third-Party Liability Insurance?

Third-Party Liability Insurance, sometimes known as just Third-Party Insurance, is a kind of auto insurance coverage that protects the policyholder from lawsuits resulting from harm the insured vehicle causes to a third party. The Motor Vehicles Act of 1988 mandates this policy for all Indian car owners.

Everything About Third-Party Liability Insurance

Now that you know the meaning of third party liability insurances’, it’s time to understand its features. 

Key Features of Third-Party Liability Insurance:

  1. Legal Liability Coverage: This type of insurance covers you against potential legal obligations that may arise from an accident involving a third party.
  2. Third-Party Death or Injury: Compensation for a third party's death or injuries sustained in an accident is covered by the policy.
  3. Third-Party Property Damage: It offers coverage up to a certain limit for damages caused to third-party property by the insured vehicle.
  4. Peace of Mind: Knowing that liabilities towards third parties in accidents are covered provides peace of mind while driving.

It’s important to note that third party liability car insurance doesn’t cover damages to the insured vehicle or its owner. It solely exists to provide financial assistance for liabilities towards third parties involved in an accident with the insured vehicle.

Why Do You Need Third-Party Car Insurance?

Having Third Party Car Insurance isn’t just a legal mandate; it's also a crucial protection tool while on the road. Here’s why it’s indispensable:

  • Legal Requirement: In India, under the Motor Vehicles Act, of 1988, it’s compulsory for all vehicle owners to have a valid third-party insurance policy. Driving without it can lead to legal complications and penalties.
  • Financial Protection: Accidents are unpredictable. If your vehicle is involved in an accident that results in damage to third-party property or individuals, the financial implications can be significant. Third-Party Insurance shields you from these unexpected financial burdens.
  • Legal Aid: In the event of a legal dispute arising from an accident, Third Party Car Insurance offers necessary legal assistance and coverage. It helps you navigate through legal complexities without delving deep into your pockets.

How are Third Party Car Insurance Premium Rates Calculated?

The Insurance Regulatory and Development Authority of India (IRDAI) determines the premium rates for Third Party Car Insurance. These rates are calculated based on various factors:

  • Vehicle’s Cubic Capacity (CC): The engine capacity of your vehicle plays a vital role in determining the premium amount. Higher CC often results in higher premium rates.
  • Vehicle Age: Older vehicles might attract lower premium rates compared to newer models, primarily because the value of the vehicle depreciates over time.
  • Vehicle Type: Different types of vehicles (two-wheeler, private car, commercial vehicle) attract different premium rates. Premiums for commercial vehicles are usually higher.
  • Geographical Location: The area where the vehicle is registered also influences the premium. Zones are categorized based on risk levels, with metro cities often attracting higher premiums due to higher traffic density and risk of accidents.

It’s important to familiarise yourself with these factors as they influence the premium you’ll pay for your Third Party Car Insurance. Understanding these elements will also help you make informed decisions when renewing or purchasing a policy.

Third Party Car Insurance Rates for Petrol, Diesel and Hybrid Cars - 

Engine CC of the Car

Premium (1 year policy)

<= 1,000 cc

Rs. 2,094

>1,000 cc to <= 1,500 cc

Rs. 3,416

>1,500 cc

Rs. 7,897

Third-Party Car Insurance Rates for Electric Cars - 

Battery Capacity

Premium (1 year policy)

<=30 kW

Rs. 1,780

>30 KW to <=65 KW

Rs. 2,904

>65 kW

Rs. 6,712

Third Party Car Insurance Rates for Petrol, and Diesel Bikes - 

Engine CC of the Bike

Premium (1 year policy)


Rs. 538

>75cc to <=150cc

Rs. 714

>150cc to <=350cc

Rs. 1,366


Rs. 2,804

Third-Party Car Insurance Rates for Electric Bikes - 

Bike Battery Capacity

Premium (1 year policy)

<=3 KW

Rs. 457

>3 KW to <= 7KW

Rs. 607

>7 KW to <= 16 KW

Rs. 1,161

>16 KW

Rs. 2,383

What is Covered by Third Party Insurance?

Third-party insurance is designed to provide protection against the legal liabilities that may arise due to accidents caused by the insured vehicle. Below are the key coverages:

  • Third-Party Bodily Injury Liability: If your vehicle is involved in an accident that results in injuries or death to third parties, the insurance will cover their medical expenses and compensation for death or disability.
  • Third-Party Property Damage Liability: The policy provides coverage for damages caused to third-party property. This is crucial if your vehicle accidentally damages someone else’s property, and you are liable to pay for the repairs.
  • Legal Assistance: If a legal dispute arises due to an accident, Third-Party Insurance helps cover the legal fees involved. This is vital in managing the financial stress during such proceedings.

What is Not Covered by Third Party Insurance?

While Third-Party Insurance is crucial, it’s also important to understand its limitations:

  • Own Vehicle Damages: Any damages sustained by your own vehicle in an accident are not covered. This includes both minor repairs and major damages.
  • Personal Medical Expenses: If you or any other occupants of the vehicle are injured during an accident, the medical costs incurred will not be covered under third-party insurance.
  • Natural Calamities: Damages caused due to natural disasters like earthquakes, floods, or storms are not covered.
  • Man-Made Calamities: Losses or damages due to theft, vandalism, terrorist attacks, or other man-made disasters are also excluded.
  • Mechanical Breakdown: Any malfunction or breakdown of the vehicle’s internal parts isn’t covered.

Understanding the inclusions and exclusions of Third-Party Insurance will help you navigate the claims process more effectively, avoiding unnecessary surprises and disappointments. For comprehensive protection, consider combining third-party insurance with a comprehensive or own-damage cover.

Comprehensive vs Third-Party Insurance

Understanding the differences between Comprehensive and Third Party Insurance is crucial. Below is a table that contrasts the two:


Comprehensive Insurance

Third-Party Insurance

Coverage Scope

Wide-ranging coverage including own vehicle damages, theft, natural and man-made disasters, in addition to third-party liabilities.

Covers only liabilities towards third-party injuries, deaths, and property damages.


Relatively higher due to extensive coverage.

Generally lower as it provides limited coverage.

Own Damage

Covers damages to the insured vehicle due to accidents, theft, or calamities.

Does not cover any damages to the insured vehicle.

Personal Accident Cover

Usually included, providing coverage for the owner-driver.

Optional and can be added at an extra cost.

Legal Liability

Provides legal liability cover for third parties as well as passengers.

Only covers legal liabilities towards third parties.

Add-on Features Availability

Allows for various add-ons and additional covers to be included, enhancing protection.

Does not offer the option for additional covers or add-ons.

How to Get Cheapest Third-Party Car Insurance?

Getting affordable Third Party Car Insurance doesn’t have to be challenging. Follow these steps:

  1. Compare Quotes: Various insurers offer different premium rates. Make sure to compare quotes from multiple providers to find the best deal.
  2. Avail Discounts: Insurers might provide discounts for various reasons - no claim bonuses, membership of recognized automotive associations, or even for installing safety devices in your vehicle.
  3. Maintain a Clean Driving Record: A record free of accidents and violations can influence insurers to offer lower premium rates, as you're considered a low-risk driver.
  4. Choose a Reputable Insurer: While finding a low premium is important, it’s also crucial to choose an insurer with a good reputation for hassle-free claim settlements.
  5. Renew On Time: Timely renewal of your policy ensures uninterrupted coverage and might also make you eligible for discounts.

By following these steps, not only do you find an affordable policy, but you also ensure that it provides reliable coverage when needed. Always read the policy terms and conditions carefully before making a decision.

What Documents Are Needed to Buy a Third-Party Car Insurance?

  • Acquiring Third Party Car Insurance is a straightforward process, requiring minimal documentation. Below is a list of documents needed:
  • Vehicle Registration Certificate: This official document provides necessary details about your vehicle, such as its registration number, chassis number, and engine number.
  • Personal Identification Proof: Insurers require a valid ID proof, which could be any government-issued identification like Aadhar Card, PAN Card, or Passport.
  • Vehicle Fitness Certificate: Especially crucial for commercial vehicles, this certificate attests to the vehicle’s fitness and road-worthiness.
  • PUC Certificate: A valid Pollution Under Control (PUC) certificate is mandatory, ensuring that your vehicle meets environmental emission standards.

How to File a Third-Party Insurance Claim?

Filing a Third Party Insurance claim involves the following steps:

  1. Report the Incident: Inform the insurance provider about the accident immediately. Delay in notification might lead to claim rejection.
  2. FIR Filing: In case of significant damage, injury, or death, file an FIR at the nearest police station.
  3. Document Collection: Gather necessary documents like the insurance policy, vehicle registration certificate, driving licence, and FIR copy if applicable.
  4. Third Party Details: Collect details of the third party involved in the accident, including their name, contact information, and vehicle details.
  1. Witness Details: If there are any witnesses to the accident, note down their names and contact information.
  2. Claim Form Submission: Fill and submit the claim form provided by the insurance company, attaching all required documents and details of the incident.
  3. Legal Proceedings: Third Party claims are settled through the Motor Accidents Claims Tribunal. Attend the hearings and cooperate with the legal proceedings for a successful claim settlement.
  4. Claim Settlement: Upon approval, the insurance company will settle the claim amount with the third party.

Remember to act promptly and follow the due process to ensure a smooth and successful claim settlement.

Benefits of Having a Third-Party Car Insurance

Having Third Party Car Insurance offers several benefits:

  • Legal Compliance: It’s mandatory under the Motor Vehicles Act of 1988 to have at least third-party insurance before taking your vehicle on the road. This policy helps you comply with the law.
  • Financial Protection: Accidents can lead to substantial financial liability, especially if a third party is involved. This insurance protects you from the financial burden arising from third-party injuries or property damages.
  • Legal Assistance: Legal disputes after an accident can be complex and expensive. Third-Party Insurance provides legal coverage and assistance, relieving you of the financial stress from legal proceedings.
  • Peace of Mind: Knowing you have protection against third-party liabilities allows for stress-free driving, safeguarding you from the unpredicted financial implications of accidents.

Factors that Affect the Premiums of Third-Party Car Insurance

Several factors influence the premium amounts for Third Party Car Insurance:

  • Vehicle’s Cubic Capacity (CC): The engine’s cubic capacity is a significant factor. Vehicles with higher CC are often subjected to higher premiums due to increased liabilities.
  • Vehicle Age: The age of your vehicle can influence the premium, with older vehicles typically attracting lower premiums than newer ones.
  • Location: Premiums vary based on where the vehicle is registered. Typically, areas with higher traffic density might attract higher premiums due to the increased risk of accidents.
  • Vehicle Type: Different types of vehicles (two-wheeler, four-wheeler, commercial vehicles) attract different premium rates.
  • Vehicle Usage: Vehicles used for commercial purposes often attract higher premiums compared to those used for personal purposes due to the increased risk associated with their usage.

Understanding these factors can help you better navigate the premium structure and possibly find ways to minimize the costs without compromising on the necessary coverage. Always compare and analyze policies from different providers before making a decision.

Final Thoughts

Third-Party Car Insurance is an indispensable tool for every vehicle owner, providing essential legal and financial protection against liabilities towards third parties involved in an accident. While it’s the minimum legal requirement, understanding its scope, benefits, and the factors affecting its premiums is crucial for making informed decisions. This insurance not only safeguards you from significant financial burdens but also ensures peace of mind while driving. Before settling, take time to explore and compare various plans available in the market to secure a policy that aligns well with your needs and offers value for money. 


1. What is a Third Party Liability Insurance?

Coverage for injuries or damages to third parties or their property brought about by the covered vehicle is provided by third-party liability insurance.

2. Does Third Party Insurance have to be carried in India?

Yes, all vehicle owners are required to carry at least Third Party Insurance under the Motor Vehicles Act of 1988.

3. How is the Third Party Insurance premium determined?

The cubic capacity (CC), age, kind, usage, and region of registration of the vehicle are among the elements that affect premiums.

4. Does Third Party Insurance have an online store?

Certainly. Using their official websites, the majority of insurance companies provide customers with the option to acquire Third Party Insurance online.

5. What paperwork is required to submit a third-party insurance claim?

The insurance policy, the car registration certificate, the driver's licence, the FIR (if applicable), and the third party and witness details are all considered essential documents.

6. When should I notify my insurer about an accident?

To avoid issues with claim settlement, it's best to notify an accident to your insurance company as soon as possible.

7. Can I use the internet to renew my third-party auto insurance?

Yes, for convenient and timely policy renewals, the majority of insurers offer an online renewal alternative.

8. Does my personal car damage get covered by third-party insurance?

No, it exclusively addresses obligations to third parties and their belongings.

9. What does third-party auto insurance not cover?

It excludes coverage for personal medical costs, damages from natural or man-made disasters, and damage to one's own car.

10. How long is third-party auto insurance good for?

The typical duration of third-party auto insurance is one year, and it must be renewed every year.


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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