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Things to Know About a Liability-only Car Insurance Policy

Published On Feb 03, 2021, Updated On Mar 20, 2021

It is mandatory to drive vehicles on Indian roads at least with a third-party insurance policy. This insurance covers the legal liability or damage caused by the owner’s vehicle to a third person or their property.

According to the Motors Vehicle Act, 1988, all vehicles must carry a third-party insurance policy, that covers the damage caused by the owner’s vehicle on third party property or person. The liability only car insurance policy protects the owner from legal liabilities that arise owing to the damage caused by the policyholder on a third party property or person. There are three parties involved in the liability-only car insurance policy, namely the, insured person or the first party, the second party or the insurance company, and the affected individual or the third party.

Things to Know About a Liability-only Car Insurance Policy

Inclusions Under the Liability Only Car Insurance Policy:

It is mandatory for all vehicle owners, who are registered under the Regional Transport Authority of India, to buy a third-party car insurance policy. The inclusions that are covered under the third party car insurance policy are as follows:

1. Injury Claims:

Under the liability-only car insurance policy, the cost of the injury that is caused to the third party is covered. Injuries of all degrees are covered and the medical bills for the injured will be paid by the company, saving the insured from the expenses.

2. Covers Disabilities:

If there is a permanent or partial total disability to the third party in the accident, caused by the insured, this third party insurance covers the compensation. In cases of disability, such as the loss of body parts, the car insurance company will pay compensation to the third party on behalf of the policyholder.

3. Damage to The Property:

If there is any damage caused to the property of the third party in an accident, the damages will be paid by the insured in the liability-only insurance policy.

4. Compensating for Death:

In case of death of the third party in accidents caused by the insured, death compensation will be paid by the insurance company. There is no limit on the coverage that will be provided and depend on the profession, age, and earning power of the deceased person.

Benefits of the Liability Only Car Insurance Policy:

Even the safest drivers on the road can end up in road accidents, owing to distractions and faulty driving practices. Third-party car insurance helps them to enjoy expert financial protection in the event of damages caused to a person or property. The other benefits of this policy are,

1. Absolute Peace of Mind: Having this policy at hand prevents legal hassles and renders financial protection for the insured.

2. Processed Faster: These policies do not incur much verification and don’t involve detailed inspection and documentation. Getting this policy is quick and easy and is not time-consuming as well.

3. Affordable: A third-party liability insurance is cheaper compared with a comprehensive policy as it does not cover car’s own damages.

Bottom Line:

The liability-only car insurance policy is cheap and affordable and covers the damage and death of the third party on the road if caused by the insured. It fulfills the legal obligation of the regulatory authorities in India but will not cover its vehicle damage unless additional riders are included with the plan by the policyholder.

Disclaimer: 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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