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In Motor Insurance, What Is The Third-party Insurance Cover?


According to the Motor Vehicles Act, third-party motor insurance is a requirement for all vehicle owners. It covers your legal responsibility for any harm you might inflict on another person while operating your car, including physical injury, wrongful loss of life, and property damage. The third-party cover does not cover your vehicle’s damage. Therefore, it’s crucial to comprehend its total reach.

party Insurance Cover

The second and third parties:

A third-party motor insurance policy is one in which the insurance provider commits to defending the insured if he is held accountable for harm or loss caused to a third party. The insurance provider and the insured are the first and second parties, respectively, whereas any other person who was harmed or lost his life or who made a damage claim against you is the third party. This is what third-party vehicle insurance is.

1. The third party:

The term “third-party” refers to anyone (other than the insurance policy’s contracting parties) who is not a driver of the insured vehicle. It also includes pedestrians and passengers inside the insured vehicle.

2. What does “Act Only” cover mean?

Act-only or third-party motor insurance coverage only covers your legal responsibility for the harm you legally cause to a third person while driving your vehicle, such as bodily harm, wrongful loss of life, and property damage. Your personal vehicle is not covered by third-party motor insurance coverage.

3. How is “PA” risk included in the “Third-Party Only” policy?

In the event of permanent disability or loss of life due to an accident, the owner-cum driver’s accident risk is also covered by third-party or act-only policies. The owner-cum-driver is provided with in-built coverage in all vehicles when travelling, boarding, or boarding from the vehicle. Co-passenger accident insurance is optional.

4. The beneficiaries:

The Motor Vehicles Act makes it mandatory for drivers to carry 3rd party motor insurance, also known as “act only” coverage. The policy’s beneficiary is someone other than the two parties to the contract—the insured and the insurance company—which is why it is known as a “third-party” cover. The insurance covers the insured’s legal responsibility for a third party’s loss of life, permanent injury, loss, or property damage. According to the Motor Vehicles Act of 1988’s “fault liability” or “no-fault responsibility,” the victim may be entitled to compensation. However, only bodily harm or loss of life can result in infinite compensation. The responsibility of the insurer in the event of property damage is capped at Rs. 7.5 lakh.

5. The decision of third-party premium:

“Legal liability” is protected under third-party policies. It is impossible to predict in advance what the liability may be in the event of an accident; hence, the premiums do not change according to the value of what is being insured. The WC Court or Motor Accidents Claims Tribunal (MACT) decides how much money the accident victim may receive in compensation. IRDAI has eliminated tariffs. IRDAI now sets the premium for third-party liability insurance exclusively.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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