Why Third-Party Car Insurance is a Must-Buy for Every Car Owner?
1 year ago Kelvin Braden Comments Off on Why Third-Party Car Insurance is a Must-Buy for Every Car Owner?
In India, it is mandatory for car owners to have a third-party car insurance policy. Section 146 of the Motor Vehicles Act, 1988 stipulates that no car can be parked or driven in India without an active 3rd party car insurance policy. In this article, we will talk about third-party car insurance and look at the reasons that make it a must-buy for all car owners.
Third-Party Car Insurance
When you buy a car, the dealer offers certain insurance plans for your vehicle, and if you wonder why, then it is important to note that it is legally mandatory for all car owners to have an active four-wheeler insurance policy on their vehicles.
Car insurance policies are of 2 types, namely, a third-party liability-only car insurance plan and comprehensive car insurance. In third-party car insurance, the insurer offers protection from damages caused to a third-party person or property due to an accident involving the insured car.
Before we go ahead, let’s understand what a third party is?
In a car insurance policy, there are three parties:
- First Party is the policyholder or the person who has purchased the car insurance policy.
- Second-party is the insurance provider that is offering coverage to the policyholder.
- Third-Party is anyone except the first and second parties of the insurance policy.
So, in third-party car insurance, the second party (insurance provider) offers coverage for losses due to damages to a third-party person or property caused by the insured vehicle of the first party (policyholder).
Coverage Offered By Third-Party Four-Wheeler Insurance
An online third-party car insurance policy offers coverage from financial and legal liabilities arising from a loss or damage to a third-party person or property that can be attributed to the insured car. So, if the insured vehicle meets with an accident or mishap and causes third-party damage, then the policy reimburses the financial and legal costs.
However, it is important to remember that these policies do not offer coverage for any injury to the policyholder or damages to the insured car.
Why is a Third-Party Car Insurance Policy a Must-Buy for Car Owners?
There are two factors that make a third-party car insurance policy a must for car owners:
- It is mandatory
As mentioned above, Section 146 of the Motor Vehicles Act, 1988 makes it mandatory for all car owners to purchase a car insurance policy that offers third-party liability cover. Legally, you are not allowed to drive your car without a valid policy. If a car owner is found without a valid policy, then he can attract a fine of ₹2000 and/or be imprisoned for up to three months. If the same person is found driving without an active policy for the second time, then the fine can increase up to ₹4000 with imprisonment.
- Offers financial protection
Driving is risky. Even the safest drivers cannot be assured of not having a single accident. Sometimes, a small mistake made by another vehicle on the road can cause you to take evasive measures and cause an accident. During such incidents, if your car causes damage to a third-party person or property, then you can be exposed to the risk of compensating for the losses. Buying third-party car insurance online ensures that these costs are managed by the insurer, and you can handle the situation without burning a hole in your pocket.
The legal mandate makes it compulsory for car owners to have a third-party car insurance policy. However, it does not cover the damages to the insured vehicle or injuries to the car owner. Hence, many people opt for a comprehensive four-wheeler insurance policy that offers third-party liability cover plus own-damage cover. If you are purchasing a car, then make sure that you buy a car insurance policy with at least a third-party liability cover. However, if you want to include an own-damage cover, too, then you can consider opting for a comprehensive plan. Choose Wisely. Good Luck!