Is having third party insurance is mandatory?

The Motor Vehicles Act, 1988 mandates that third-party (TP) insurance be carried by all motorists before they are allowed to drive a vehicle on public highways in India (Section 146). But can you tell me what it is? When the policyholder’s vehicle is found to have caused injury or death to a third party, the TP insurance kicks in to cover the costs associated with that liability. A three-year TP policy for cars and a five-year TP policy for motorcycles became mandated by the Supreme Court of India in July of last year. TP insurance may be purchased from any non-life insurance company when you register your car. In the event of property damage to a third party, Irdai will pay up to 7.5 lakh (about $1,040,000).

The policyholder is responsible for any costs over and above the amount covered by insurance. Death and injury claims are unlimited in terms of coverage. Insurance companies often sell TP in conjunction with their own damage protection, but beginning September 1st, you will be able to purchase TP on its own and may opt into your own damage cover if you so desire.

Defining “Third-Party” Automobile Insurance
You need to know who the first and second parties are before you can figure out what or who the third party is. In this context, “person” refers to the policyholder. As for the second, they are the insurance company. Everyone else is the unnamed third party. There might be both a culpable person and a victim of an accident who suffers undeserved harm. Third-party automobile insurance is there to help in these situations.

Justification for obligatory third-party insurance
By law, every vehicle must have third-party insurance to protect its occupants and other people on the road in the event of an accident. The at-fault party also does not incur substantial costs because their insurance coverage will pay for them. Although it would be preferable if every car had third-party liability coverage, in India, approximately 60% of cars are not insured. Most people who are unintentionally involved in accidents wind up paying for their own medical bills and repair bills. This is why having liability insurance when driving is a must.

Who or what does the insurance protect?
If you cause the injury or death of another person while operating a motor vehicle, your third-party liability insurance will pay for their medical expenses and legal representation. Additionally, it protects against financial loss incurred by the insured party as a result of property damage to third parties caused by the covered vehicle. Your own car and your own person are not covered under this policy.

When do you see results?
The process commences when the accident victim files a First Report of Injury (FIR) against the responsible policyholder with the police. A bill or invoice will be sent to you shortly. Helpful in filing a claim with the Motor Accident Claims Tribunal, the dedicated court for such incidents. Be careful to file the lawsuit in the appropriate location, either the petitioner’s home state or the state where the incident occurred. The court will see to arguments from both sides before rendering a decision on who is at fault based on the facts presented.

The victim can then file a claim for this sum with the at-fault driver’s third-party auto insurance provider. Nonetheless, this is the most the insurance will pay, which may not be enough to cover the whole cost of repairs. You have exhausted your insurance company’s liability and must now pay for the repairs personally. Because of the difficulty involved, this procedure should be used only in extreme emergencies, such as when someone’s life is in danger. Out-of-court settlements are preferable in cases involving solely car damage since they may be reached more quickly and with less hassle.