Active Stocks
Wed Jul 24 2024 15:59:42
  1. Tata Steel share price
  2. 160.30 0.16%
  1. NTPC share price
  2. 392.55 2.67%
  1. ITC share price
  2. 494.05 0.41%
  1. State Bank Of India share price
  2. 852.25 -1.35%
  1. Wipro share price
  2. 500.05 -0.10%
Business News/ Opinion / Online-views/  Third party insurance

Third party insurance

Third party insurance



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.


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.


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 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 670; for a car above 1,000 cc but below 1,500 cc, the premium is fixed at 800; and for cars above 1,500 cc, it is 2,500. But these premiums are under consideration since the premiums are very low and the claim payout much higher.


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.

—Deepti Bhaskaran

3.6 Crore Indians visited in a single day choosing us as India's undisputed platform for General Election Results. Explore the latest updates here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 04 Apr 2011, 09:11 PM IST
Next Story footLogo
Recommended For You