WHAT IS THIRD PARTY
The dictionary defines third party as a generic term for any individual who does not have a direct connection or a stake with a transaction, but who may be affected by the transaction.
Third party insurance is a cover for this third party. Known as third party liability cover, it compensates for any damages made to a third party by the first party or the insured person.
FIRST PARTY AND SECOND PARTY
A first party is the insured person or the person who buys the policy and the second party is the insurance company who agrees to compensate the third party in case the insured person causes any damage to the third person. The insured person pays a premium to the insurance company who agrees to compensate the third party up to the sum insured.
However, in case the damage leads to the death of the third party, the insurance company may need to stretch its sum insured limit.
MOTOR THIRD PARTY LIABILITY
It is a cover that gives you protection in case of damage by your vehicle to life or property of a third person. This is the most popular third party cover and is mandatory for all vehicles plying on the roads. Without this cover, you can’t drive away with your vehicle from the showroom.
Cover amount: In case of an accident that causes bodily injury or loss of life, the third party cover is unlimited. The entire amount of compensation is borne by the insurance company once the court decides on the amount. For damage to property, the maximum liability is limited at Rs 7.5 lakh.
Premium: The premium is fixed on a third party motor insurance cover and depends on the cu. capacity (cc) of your car. For a car that is below 1,000 cc, the premium is fixed at Rs 670; for a car above 1,000 cc but below 1,500 cc, the premium is fixed at Rs 800; and for cars above 1,500 cc, it is Rs 2,500. But these premiums are under consideration since the premiums are very low and the claim payout much higher.
OTHER THIRD PARTY COVERS
You can also take a generic third party insurance that covers you in case of damage to a third party. In insurance parlance, this is known as personal liability cover and typically comes packaged with a householder’s packaged policy.
Third party insurance benefits can be taken only in case of an accident and not if the act is deliberate or involves criminal intent.