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Insurance Article

How to Claim Compensation under Third Party Motor Insurance

July 25 2016

Third party can claim compensation for:

  • Injury
  • Death
  • Property damage caused (up to 7.5 lakhs)

Understanding this motor insurance mandatory cover

Road accidents have become a regular affair in today's times. However, we seem to know very little about the claim process in case of such accidents. In case of damage to the car, we often end up paying from our own pockets or forfeiting our accrued No-Claim Bonus (NCB) by depending on the insurer.

There are 3 simple steps involved in a third party motor insurance claim, namely:

  • Filing an FIR and obtaining a charge sheet from the police
  • Approaching a Motor Accident Claims Tribunal through a motor claims lawyer
  • Examining of the claim by the court and fixing a liability

This process seems simple, but there many facets that complicate it, such as the particular scenario in the case, coverage of both parties, etc. Here are the different permutations and combinations of situations where an individual A's car has been damaged by another B's car in an accident and the legal solution(s) in each case.

Possibility 1: When A has only basic third party insurance

In this case, A's own car has been damaged, and this is not covered under a third party contract. Here A is the third party for B, and can only claim compensation under B's third party insurance. Also, A must be able to establish negligence/wrong doing by B before the court.

Even if the court decides in A's favour, A might not get the full amount filed for. B and his insurer will only pay the amount awarded by the court. Unfortunately, A cannot claim the balance damage from his own insurer because compensation for the same damage cannot be claimed more than once.

Subrogation is the act where the insurer of one party pays for the accident expenses and claims this as reimbursement from the insurer of the other party.

It is possible only with comprehensive insurance and it is the insurer’s discretion whether to go for subrogation.

Possibility 2: When A has an comprehensive motor insurance

When A has comprehensive motor insurance, he can choose to follow any one of these procedures:

  • He can claim compensation under the 'own damage' section of his own policy from his insurer. This is the easiest and most commonly adopted method, but results in loss of NCB.
  • He can file and fight a case on his own to get compensated under the third party insurance of B as explained above in the third party policy.
  • He can request his own insurer to subrogate the case and fight on his behalf. If his insurer refuses to subrogate the case, then he has only options (i) and (ii) available to choose from.

Possibility 3: When both parties have comprehensive covers

Your insurer will not agree to subrogate your claim against another insurer even if both parties have comprehensive insurance, unless it is a case of death or disability. Even though it is legally possible, it is advised to settle ‘only vehicle damage' claims out-of-court as the process is not only cumbersome but also time consuming. Third party claims are filed for injury and death but settlement of these takes a long time too.

If you are still keen on approaching the tribunal, make sure you have all the documents in place. Also, ensure that proper narration of the incident is recorded in the FIR and original records of expenses are maintained.

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