What is the Cost of Third Party Car Insurance?

Written by Sharad Bajaj

Updated On Oct 14, 20232 min read

With this article decode the cost of a third party car insurance policy!

Understanding How Third-Party Car Insurance Works
How Much Does a Third-Party Car Insurance Policy Cost?
What All Is Covered Under Third Pary Car Insurance Policy?
Exclusions Under Third-party Car Insurance
Conclusion

What if your car gets into a collision with another vehicle and gets damaged? Have you ever stressed the fact that unforeseen accidents that happen because of your car sometimes lead to a huge financial burden for you? Therefore, third-party car insurance is the best option that safeguards car owners financially from damages such as disability, death, injury, or any property damage that occurs to third parties.

In simple terms, third-party car insurance is the type of policy that provides financial and legal protection to the car owner against third-party damage. According to the Motor Vehicles Act, 1988, it is mandatory to get your vehicle insured with third-party policy. If you are found driving without any valid third-party insurance, you may end up paying a huge penalty. Continue reading to dive into the details!

Understanding How Third-Party Car Insurance Works

In a third-party insurance plan, three parties are involved. Let’s understand more about it with the help of an example.

Mahesh skipped the red light, and as a result, his car collided with Aman’s bike. Aman had an injury and was rushed to the hospital. The doctor told him that his leg had broken and he would have to undergo surgery. As Mahesh was at fault he had to bear Aman’s treatment expenses. Mahesh immediately got in touch with his third-party car insurance provider, InsuranceDekho, and updated them about the case. Soon, after all the verification and paperwork, all the damages that happened to the third party were incurred by the insurance company.

Therefore, in the above case study, Mahesh is the first party who is an insured person. An insurance company is the second party with whom Mahesh is financially and legally secured, and the last one, Aman, is a third party who will claim the damages caused by the first party from the second party.

How Much Does a Third-Party Car Insurance Policy Cost?

There is a certain amount paid by the policyholder known as the premium to be covered under a reliable car insurance plan. Therefore, the premium of a third-party car insurance policy depends on your car’s engine capacity and, thus, remains the same across different car insurance companies. Every year, these third-party car insurance rates are revised by IRDAI, which assists you in finding out the cost of your third-party car insurance. The current rates are listed in the table below to help you in determining how much car insurance will cost:

Cubic Capacity Of The Car	Premium Cost
Within 1000cc	₹2,094
Between 1000cc to 1500cc	₹3,416
Above 1500cc	₹7,896

What All Is Covered Under Third Pary Car Insurance Policy?

Below mentioned are the types of coverages that are offered under third-party insurance by the insurance companies.

Destruction of Property:

The third-party insurance policy is liable to pay for the damage in case your vehicle accidentally collides with any tangible asset of another person such as a shop, home, vehicle, or any other.

Vehicle Damages:

When a driver unintentionally hits a third party vehicle with their own vehicle, their insurance policy will cover the cost of the damage that occurred to the third party vehicle on their behalf.

Bodily Injuries:

If the victim is disabled as a result of an accident, the amount of compensation that must be granted will be determined by the motor accident claims tribunal. However, the insurer only pays 50% of the compensation sum if the victim suffers from a loss of limb or partial eyesight.

Death of a Third Party:

If the automobile owner inadvertently runs over someone or causes fatal injuries to a third-party individual, resulting in his or her premature death, the motor insurance company will pay compensation to the victim's family on behalf of the policyholder.

Exclusions Under Third-party Car Insurance

In certain circumstances, your third-party car insurance may not cover you against the damage caused by you to another person. Some of these situations are mentioned below.

Damages to the vehicle occurred if it was used for illegal or harmful intent.
Driving without valid driving licence
Damages occurred because the driver was driving while intoxicated by alcohol, drugs, or another substance.
Car damage brought on by nuclear activity, war, or terrorist attacks.

Conclusion

Besides driving safely on roads, sometimes accidents just happen and bring a lot of financial burden for you. Therefore, in this case, a third-party car insurance policy comes in handy. You can check the list of the best insurance companies to compare the plans and choose the most appropriate one for yourself. It will not only keep you covered financially but will also provide you with legal assistance.

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.

Written by Sharad Bajaj

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Sharad is an insurance industry veteran who has managed motor insurance products for over a decade. He helped set up and scale the motor insurance vertical for a leading insurance company in his previous stint. In his spare time, Sharad likes to read and be in tune with nature.