According to Section 146 of the Motor Vehicles Act, 1988, third-party (TP) insurance is mandatory for you to be able to drive on Indian roads. But what exactly is it?
TP insurance comes into play when the policyholder’s vehicle has caused damage to a third party and is legally liable to compensate them for death or damages caused.
The Supreme Court in July last year made it mandatory for all car owners to have a three-year TP policy and two-wheeler owners to have a five-year policy. You can buy TP cover at the time of registering your vehicle from any non-life insurer. According to Irdai, third-party property damages are covered up to a sum of ₹7.5 lakh. If the degree of damage is beyond the insurance cover, the policyholder has to bear the additional expense. There is no cap on the liability covered for death or injury.
Insurance companies offer TP by bundling it with an own damage cover but September 1 onwards, you will be able to buy only TP and you can choose to get the own damage cover at your own discretion.