When it comes to car insurance, you must have wondered what exactly is the scope of third-party liability coverage? Does it have any exclusions? What are the salient features of liability-only car insurance? So, let’s understand what is liability coverage in car insurance, its features, and more.
What is liability coverage in car insurance?
Liability coverage in car insurance covers policyholders from financial setbacks if they are proven to be legally responsible for injuries to others or damage to their property when driving their vehicle. There are two aspects of car insurance liability coverage —
- Bodily injury: This aspect deals with medical costs, loss of wages, and legal charges if one or multiple injured parties file a lawsuit against the policyholder.
- Property damage liability: This aspect covers property damage liabilities of a third party and deals with repairs or replacement of the damaged property.
Car liability insurance provides coverage for injuries or damages in case of third parties and their property only. It does not provide coverage to you or your property/vehicle.
Features of Liability Only Cover in Motor Insurance
The features of a car insurance policy covering only third-party liabilities include —
- Third-party liability cover: The policy provides coverage for any legal liabilities stemming from accidents that cause injury, death, total permanent disability, or property damage to a third party involving the policyholder’s vehicle.
- Personal accident cover: In these types of policies, if there is a total disability or death of the owner/driver, most insurers provide personal accident coverage of up to INR 2 lakh in the case of commercial and private vehicles.
- Extent of cover: Coverage for third-party liabilities is comprehensive, with up to INR 7.50 lakh available for property damage and injuries. Policyholders can opt to limit the coverage for damage to third-party property to INR 6,000 to reduce premiums.
Coverage under Liability Only Cover
Inclusions
The inclusions in car insurance liability coverage are –
- Injury claims: All the costs related to third-party injuries are covered by a third-party insurance cover.
- Partial disability: In cases of accidents where the third party suffers from partial or permanent disability, the insurer provides compensation to the victim. This compensation is provided to the third party on behalf of the insured person.
- Property damage: In a liability-only policy, the insurer covers all the losses to the third party’s property.
- Death: In the event of the death of a third party in an accident involving the policyholder’s car, the compensation is paid to the relatives of the deceased by the insurer on behalf of the insured.
Exclusions
The exclusions covered under car insurance liability coverage are –
- If your fault results in causing damage to the property of the other party
- Any employee of the insurer who dies or suffers an injury in a car accident is not provided coverage or any sort of compensation as per the policy’s terms and conditions.
- The policy does not provide coverage for the use of nuclear weapons or any such object or weapon and theft-related liabilities.
Conclusion
Car insurance liability coverage not only meets the mandatory legal requirements, but it also acts as the first layer of financial protection against claims that would otherwise cause significant financial setbacks to the policyholder. It is important to understand what your liability insurance does and does not cover so that you know your policy's exact scope of coverage.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the relevant industry. It is advised to verify the relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.