Understanding Compensation Offered Under Third-Party Insurance Plans

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car insurance

Affordable financing schemes has made buying a car has become easy these days. You no longer need to wait for many years saving your hard-earned money to buy your dream car. Simply applying for a car loan at attractive interest rates can get you vehicle delivered within a couple of days.

However, there are two additional steps apart from securing necessary finances – registration of your vehicle and buying its insurance cover. It is a legal offense to drive a car without an insurance policy and attracts hefty penalties. So, why invite trouble when car insurance is a simple way to stay complied?

When choosing a car insurance policy, there are essentially two type of coverages, third-party and comprehensive. This article explains the compensation offered by third-party insurance covers:

Cost of property damage: The most common damage as a result of mishaps and accidents is property damage. The property damage may be in the form of damage to third-party vehicle, or some other form of damage other than an injury. At such times, the person suffering the loss has to file an FIR (first information report) with the concerned policy officials reporting the incident. This damage then needs to be registered as a case with the Motor Accident Claims Tribunal. Costs of repairs are then reimbursed to the aggrieved third-party. However, there is a limitation on the maximum amount of compensation provided for third-party damages by the insurance company which is capped at 7.5 lakhs. If the Tribunal orders a higher amount of compensation, it needs to be paid from your own pocket.

Third-party injuries: Accidents often result not only in damages but also injuries. A third-party policy, also known as liability-only plan provides compensation for third-party injuries. A third-party is the person who suffers injuries due to your fault. Such person is not a party to the insurance contract and thus known as third person or third-party.

Third-party disabilities: Liability-only plans provide compensation for disability suffered by a third person during an accident. Any cost of hospitalization and medical expenses concerning such disability is covered by your insurance provider. The disability covered is both, partial disability as well as permanent disability.

Compensation for death: Your third-party car insurance policy also pays for any compensation in case the third-party succumbs to injuries. A case is registered with the Motor Accident Claims Tribunal for the same. Although there is no amount decided that shall be paid as compensation and will be the discretion of the court.

These are the events when a third-party policy pays compensation. However, the scope of the policy is fairly limited in nature. It is advisable to purchase a third party car insurance online only when you are on a tight budget. Further, this policy is the bare minimum that you need to buy complying with the Motor Vehicles Act of 1988.

If you wish to enhance the coverage for damages to your car, a comprehensive policy can be suitable. When buying a comprehensive policy, a car insurance premium calculator can come handy in selecting the right add-ons while assessing its impact on premium. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.