We all know how risky it is to drive on roads these days. To be safe, we already have our car insurance. But are we sure we know all the details about using it at the right time and in the right way?
Most of us lack the basic knowledge that would help us avail the optimum benefits of car insurance policy. Here is a guide to knowing exactly how your car insurance can help you in times of difficulty.
What does third-party motor insurance cover?
Third-party insurance is compulsory for vehicle owners as per Motor Vehicles Act. As the name suggests, this insurance does not cover you or your vehicle. It covers your legal and financial liabilities for the damage you may cause to a third party. Here, the insured and the insurer are the first and second parties, and any third person is the third party. This policy includes injuries or death of the third party, and damage caused to the third party vehicle by your vehicle. The direct beneficiary under this policy is the injured third party, and the policyholder is a nominal beneficiary who doesn’t have to bear the legal and financial hassles.
Under third-party insurance, the third party can file a claim for compensation against you and your insurer. There is no limit on the liability covered for injury or death, while the cover for third-party property damage is Rs. 7.5 lakh, which will be compensated to the third party by your insurer. In case of the damage exceeding the upper limit, the policyholder has to pay the balance.
Similarly, if you are a third party hit by someone’s car, you can claim damages from the person. In case of injury you can claim medical expenses, compensation for physical disfigurement, and also for loss of earnings if you are unable to work after the accident; while in case of death, dependents of deceased can claim compensation on the basis of the income lost. The deceased’s medical expenses can also be claimed for. If you are claiming for property damage, you need surveyor’s report, original bills from an authorized garage, and motor vehicle inspection report to quantify the loss.
A comprehensive motor insurance policy has two insurance covers in itself- the third-party insurance and the own damage cover. Under the own damage cover, you can get your own damages and losses covered. If you do not possess a comprehensive policy, you cannot claim compensation for your own damage. In such a case, this can be done only if a third-party is responsible for your damage. Having a comprehensive policy leaves you with any one of the three options[3],
- You can claim compensation under the ‘own damage’ section of your own policy from your insurer.
- You can file and fight a case on your own to get recompensed under the other party’s third party insurance as explained above. This is the same course of action you would have to adopt if your own policy was only a third party policy.
- You can request your insurer to subrogate the case and fight on your behalf to get recompensed under the other party’s third party insurance. If your insurer refuses to subrogate the case then you are left with the above two options.
In all the above cases, it makes no difference whether the other party has a third party only policy or a comprehensive policy.
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