Is Third Party Insurance Mandatory?

Insurance generally offers basic coverage along with the option to purchase add-ons for enhanced protection. In India, different types of car insurance coverage are available; out of which, we will focus on third-party liability coverage in this blog and address your question, “Is third party insurance mandatory?”

What does third-party car insurance mean?

Let’s address the main question first, “Is third party insurance mandatory?” Yes, it is a mandatory requirement to legally drive on the road. Third-party insurance is also known as "act-only cover”. It is a type of liability insurance that protects vehicle owners from claims made by third parties. With this insurance, you are shielded from compensating third parties for any losses or injuries they experience in an accident involving your vehicle.

Why is third-party insurance mandatory?

Let’s now look into the reason why this particular type of insurance is compulsory for all vehicles.

In situations where every vehicle on the road has third-party insurance, you would see accident victims receiving appropriate compensation without straining their finances. Likewise, if you were responsible for an accident, you wouldn't have to face significant financial setbacks, as the insurance policy would handle the situation. Although the ideal scenario involves all vehicles having third-party liability insurance, about 54% of vehicles plying on Indian roads are uninsured. Consequently, many innocent accident victims find themselves footing the bill for medical treatments or repairs out of their own pockets. This highlights the critical need for mandatory third-party car insurance.

What is covered under a third-party insurance plan?

When it comes to the coverage inclusions of third-party insurance, you'll find that it provides protection for injuries and property damage caused by your insured vehicle. This protection covers a range of situations, including physical injuries, vehicle damage, property damage, and even fatalities.

Note: There are certain circumstances where third-party insurance won't provide compensation, for e.g. if the driver was under the influence of alcohol or driving without a valid license. To understand what’s covered and what’s not, be sure to read the policy wordings thoroughly before buying car insurance.

Conclusion

To wrap up, you should be aware that third-party insurance is a requirement for driving legally on Indian roads. This liability insurance ensures you won't have to handle the financial responsibility of compensating third parties for losses or injuries due to accidents involving your vehicle. It's a good idea to have a thorough discussion with your insurance provider to gain a comprehensive understanding before you decide to purchase third-party insurance.