What is Liability Only Insurance Cover in Motor Insurance

Motor insurance coverage is generally of two types — comprehensive coverage and third-party liability or liability-only coverage. Third-party liability coverage is mandatory under Motor Vehicles Insurance Act.

In this blog, we will understand in detail what is a liability only policy in motor insurance is, its features, the types of vehicles covered, the extent of coverage, and its exclusions.

What is Liability Only Cover in Motor Insurance?

Let’s start by defining what a liability only policy is.

Liability Only insurance coverage is a mandatory policy in India, required by law. It provides protection for third parties involved in accidents caused by the insured.

With this policy, your vehicle’s loss or damage will not get covered. It is a cost-effective option compared to full coverage, as the premium is lower, and the coverage is limited to third-party individuals and their property.

This type of car insurance is also known as “Act Only Cover.” The policy can get extended to cover additional risks, like personal accidents for occupants or workers' compensation for the driver. If you buy comprehensive motor insurance, liability only cover is bundled in it.

Features of Liability only cover in Motor Insurance

Let’s take a closer look at the features offered by this category of vehicle insurance.

Types of Vehicles Covered

Liability Only insurance in motor insurance is not limited to specific vehicle types. It covers a range of vehicles, including private vehicles, two-wheelers, and commercial vehicles. It also applies to goods-carrying vehicles like public and private carriers, as well as passenger-carrying vehicles.

Cover for Third Party Liability

Third-Party Liability insurance covers any legal liabilities resulting from accidents involving the insured vehicle. The insurance provider will compensate for total permanent disability, injury, death, or property damage a third party suffers. Therefore, it ensures financial protection for the insured against such liabilities.

Personal Accident Cover

Liability Only insurance in motor insurance often includes Personal Accident Cover. For commercial and private vehicles, the coverage can go up to INR 2,00,000, while for two-wheelers, it is up to INR 1 lakh. This coverage provides financial assistance in case of accidents, personal total disability, or the death of the driver/owner.

Extent of Cover

Liability Only insurance provides comprehensive coverage for third parties. Companies typically offer coverage up to INR 7.50 lakh for third-party property damage and injury.

Policyholders can also choose to limit the cover for damage to third-party property to INR 6,000, reducing the premium for the Liability Only policy. This flexibility allows policyholders to adjust their coverage based on their needs and budget.

Coverage under Liability Only Cover

Liability Only insurance in motor insurance provides coverage for various scenarios involving accidents with the insured vehicle, such as:

• Protection against damage to third-party property.
• Coverage in the case of death of a third party or bodily injury to a third party.
• Financial support for the insured vehicle owner/driver in case of Permanent Total Disability.
• Compensation for the insured vehicle owner/driver’s Accidental Death.
• Personal Accident Cover for the Owner/Driver, including Permanent Total Disability and Accidental Death.

General Exclusions of a Liability only Cover

Liability Only insurance comes with general exclusions, which include:

• Damages to the insured vehicle and personal injury expenses of the policyholder resulting from the accident are not covered.
• The death of an employee of the insured or any individual liable for reimbursement under the policy gets excluded.
• Bodily injuries to individuals arising from their employment with the insured are not covered.
• Liabilities directly/indirectly related to the use of nuclear weapons or materials get excluded from the policy.

Conclusion

This blog intended to answer the question: "What is a liability only policy in motor insurance?" This policy provides coverage for third-party liabilities, excluding damages to the insured vehicle and personal injury expenses. By focusing on third-party liabilities, a liability only policy offers an essential layer of protection while ensuring affordability and compliance with legal requirements.