Why is it important to have a third-party cover in your motor insurance? MintGenie explains
Third-party insurance is crucial due to the increasing road accidents in India. It not only covers costly hospital treatments for injuries caused by car accidents but also fulfills legal mandates, preventing penalties or license cancellations.
Official estimates suggest there are over 30 crore registered motor vehicles in India, but only around 50 per cent of them are insured. This is despite the fact that having insurance, at least a third-party liability cover, is mandatory as per the Motor Vehicles Act in India.
Though it is a well-known fact that motor insurance is one of the best ways to avoid financial strain in the wake of an accident, or any other unforeseen incidents, the penetration still continues to be very low in India. This is primarily because of a low level of awareness of the benefits of insurance. While customers tend to buy insurance when they buy a new vehicle to ensure compliance and also renew it for the next couple of years, however, they do not feel the need or urge to renew it subsequently.
However, motor insurance should be one of the key boxes to be ticked in the checklist of a person owning a vehicle. Let us see why having motor insurance is important.
Firstly, as already mentioned, as per the Motor Vehicles Act, 1988, it is mandatory for all vehicles in India to have at least a third-party insurance, which essentially covers any damages caused to a third party in case of an accident caused by your car.
So why is third-party insurance important? As data suggests, road accidents have been on the rise in India and in case of a car accident causing an injury to a third person, the ensuing hospital treatment could prove to be costly. If a customer has a third-party cover, then the insurance company pays for the treatment thereby absolving the car owner or the driver driving the vehicle from any financial obligation in terms of paying for the treatment.
Moreover, since it is mandatory by law, driving without an insurance or with an expired insurance could draw a penalty and could also lead to temporary or permanent cancellation of driving licence.
While most people buy the third-party cover because it is mandatory, they tend to often ignore the importance of having a standalone own-damage cover, which comes in handy when there is a damage or loss to the vehicle due to an accident, or theft. Ideally, having a comprehensive cover which includes damages or losses to third parties, is important, as it could help prevent stress on finances.
Apart from damage to the vehicle or a person, accidents tend to have legal repercussions. If a legal case is filed for causing the accident, then it could drag on for many months, sometimes even years to get resolved. In such cases, the insurance policy will cover the liability as per court order.
Most importantly, any form of insurance gives the much-needed reassurance and comfort to policyholders and financial support to their family members. Many of the insurance products come with a personal accident cover or can be purchased as an add-on. With such a cover, in case of an unfortunate event of the death of the policyholder, the family members will receive compensation.
Raghavendra Rao, Chief Distribution Officer, Future Generali India Insurance Company Limited
Catch all the Instant Personal Loan, Business Loan, Business News, Money news, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Business NewsMoneyPersonal FinanceWhy is it important to have a third-party cover in your motor insurance? MintGenie explains
First Published:16 Nov 2023, 08:46 AM IST
- Top Gainers
- Top Losers
- 52 Week High