What is Third Party Insurance? Why Should You Buy it?
Buying third party insurance is a necessity rather than just a matter of choice. It is made mandatory by law under Motor Vehicle Insurance Act, 1988. It is also known as act only or liability protection cover as it protects the third party against any damage, injury or death in collision. This type does not cover any damage sustained by the vehicle of policy holder or his bodily injuries etc.
What is Third-party Insurance?
Third party insurance or act only or liability insurance is a statutory need under Motor Vehicle Act. It is known as ‘Third party’ cover since the beneficiary of the policy is neither the insurer (the insurance company from which you buy the insurance) nor the insured (the policy holder). Yes! This insurance policy does not have any benefit to the insured but it covers all the financial and legal liability for death and disability of the third party.
Description:
Owing to its mandatory nature, it is an obligation for all non-life insurance companies to provide this cover. In India, it is an obligation for all the automobile dealers to provide this insurance to the customers along with the registration of their vehicle. The comprehensive cover is an add-on to the mandatory 3rd party liability cover that protects the car owner from the financial losses caused due to the damage or theft of the vehicle.
3rd party cover is the stand alone insurance cover which costs nothing in comparison to the comprehensive insurance policy. In the comprehensive insurance policy the damage claim is more frequent hence it costs several times. Till now the premium rate for the third party liability cover used to be calculated on the basis of scheduled rates provided by the Tariff Advisory Committee which is an arm of IRDA (an insurance regulator). But, now the insurance regulator has done away with the motor tariff and the compensation given to the victim depends largely on his earning capacity.
Why Should You Buy This Insurance Policy?
This is a mandatory requirement for all the vehicle owners of the country as it safeguards and protects the owners from road accidents and other such perils linked with the accidents. Bike collision can mean that you may have to shell out a fortune for the treatment of the third party or in case if it sues you, you will need to run from pillar to post. If you are insured, your insurance company bears all the expenses and takes care of your legal liabilities.
Having third party insurance is mandatory by law and hence it is not the matter of choice. However, you need to that this insurance policy is not valid if collision occurs outside the geographical limits as mentioned in the policy document. There are certain other conditions under which policy is not valid like if you are driving without license or in the intoxicated state or if your vehicle is being driven by some other person at the time of accident.
