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All You Wanted to Know About Third Party Insurance

All You Wanted to Know About Third Party Insurance
Last Updated: Sep 28, 2016 | 1,095 Views
Anil, an IT professional, is in the process of buying a car. However, he is not aware about third party insurance and how does it exactly benefit him. With this problem at hand, Anil came to My Insurance Club so that we could solve his problem and answer his queries in detail. While the queries may have been put forward by Anil, he is not alone having issues in understanding third party insurance. There are many among us who face the same dilemma.  
Let’s understand what third party insurance exactly is and how is it beneficial for us.  

What Is Third Party Insurance?

Motor Vehicle Insurance can be broadly categorised in two – Comprehensive and Third Party Insurance (TPI). Comprehensive Insurance covers Theft & Accidental damage for you and your vehicle. It's the most complete protection you can get and provides cover up to the insured amount. TPI protects you from liability arising from your vehicle’s participation in an accident that led to the injury, death or damage of an arbitrary third party. 
In India, Third Party Insurance is more than just a precautionary safe-guard: It is mandatory, and covers any financial liability the policy holder may incur from a third party. 

How do I Get Third Party Insurance?

Most Comprehensive policies include a Third party cover with the Policy. This works well as both benefits are delivered with a single policy. 

Options to purchase a standalone Comprehensive Insurance, with a TPI Policy as an add-on are also available, and cater to those looking for the best value. Purchasing Comprehensive and TPI separately enables you to cherry-pick each policy individually, potentially increasing benefits while maximizing savings. 
Why do I need Third Party Insurance?

In addition to the Statutory Requirements for TPI in India, there are a number of benefits to having a robust TPI policy, including – 

Protection against the unknown – 

While comprehensive insurance has a fixed cover amount based on the insured vehicle’s value, a TPI policy protects the insured from potentially higher liabilities faced in the event of any incident with a third party. This is of particular significance as in most cases compensation/pay-outs are decided based on the effected third party’s particulars

Towards end of vehicle’s life – 

In the case of vehicles over a decade old, and whose current value is deemed to be under INR 50,000/- it may not be viable to renew Comprehensive insurance policies year after year. In such vehicles, TPI ensures they are protected from any outward incidents which may occur, as well as being lawfully insured. 

TPI – Good to know information

Ease of Purchase – 

TPI can be purchased instantly, since it does not require vehicle inspection/reporting. TPI can be equipped with minimal pre-cover formalities.

Affordable and Cost Effective – 

The premiums of TPI in India has been updated as recently as April 2015, and dictates a flat rate across 3 segments. Each slab varies depending on the engine displacement of the insured motor vehicle. 

Features of TPI – 

While careful perusal of policy documents is recommended for specific terms of the various TPI policies available, most Insurance providers offer TPI with the following features – 
  •     Death or bodily injury to a third party
  •     Damage to third party property
  •     Accidental Death of the insured vehicle owner/driver
  •     Permanent Total Disability of the insured vehicle owner/driver
Choosing a robust TPI policy ensures your journeys remain stress free, knowing you have the advantage of being fully protected against third party liability at minimal costs. 

Photo credit: Gallimafry

Manoj Aswani
Manoj is the co-founder and COO of MyInsuranceClub. He has experience in Financial Services, Internet, Insurance and Outsourcing business. He has done his Post Graduation from XLRI, Jamshedpur.

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