A third party insurance policy is also referred to as the liability coverage. It provides protection against any legal and financial liabilities against a third party if your vehicle is involved in an accident. The insurer bears any compensation claim for damages to property or bodily injury caused by the insured vehicle to a third party.

The victim can claim for a compensation with Motor Accident Claims Tribunal in the event of an accident. After the settlement, the insurance company of the accused bears the claim amount on behalf of the insured. While there is no specific limit for death or injuries to a third party, the liability cover for property damage is capped at Rs.7.5 lakh.

Advantages of a third party insurance policy

Besides covering any legal liability against third parties, many insurers also provide a personal accident cover along with a third party car insurance policy. Here are a few advantages of having a standalone third party insurance policy for your vehicle:

• Cost-effective

The biggest benefit of having a third party car insurance is that it’s easy on your pocket. Since it covers only the third-party liabilities, the premiums are much lower when compared to a comprehensive car insurance policy. If the market value of your car is low, it’s prudent to buy a third party insurance which is cost-efficient and can be managed easily.

• Easy and Quick

Since a third party insurance does not cover your own vehicle, it does not require any inspection to renew or buy a car insurance policy. It can be purchased online without any documents which is a fairly quick and simple process. You can get your policy renewed anywhere and anytime as per your convenience.

• Peace of mind

A third party car insurance brings peace of mind when dealing with financial situations. By securing you against legal liabilities when you inflict damage to the third party, it ensures you don’t have to face hassles and pay out of your pocket during such a scenario.

Disadvantages of third party car insurance

Apart from the advantages, there are certain limitations attached to a third party car insurance policy which includes:

• No coverage for your vehicle

When your car gets damaged due to a road accident especially when you’re at fault, or in case of mishaps like theft, fire or any other calamity, your third party car insurance policy would not be liable to compensate you for damages incurred.

A third party insurance policy is cost-effective due to affordable premiums. On the other hand, you may need a comprehensive coverage to protect your vehicle against the risk of accidental damages or mishaps like theft, fire, or natural calamities, etc.