Third-party insurance

Third-party insurance is the part of motor cover that pays for harm you cause to other people: injury, death or damage to their property. The Motor Vehicles Act makes it compulsory for every vehicle used in a public place. It pays nothing for your own vehicle.

Why it is compulsory

The law requires it because an accident can ruin a third party, someone you injure, or whose vehicle or property you damage, through no fault of their own. Third-party cover guarantees they can be compensated even if you could not afford to pay. Section 146 of the Motor Vehicles Act, 1988 bans using a vehicle in a public place without it, and under section 196 (as amended in 2019) a first offence can mean up to three months in jail, a ₹2,000 fine, or both.

What it does and does not cover

It covers the “third party”, the other person, not you and not your vehicle. Injury or death you cause to others is covered without a monetary cap; damage to their property is covered up to a limit. For injury or damage to your own vehicle, you need own-damage cover. The two together make a comprehensive policy.

What most people should do

Third-party cover is the legal minimum, but it leaves your own vehicle unprotected. For anything beyond an old, low-value vehicle, a comprehensive policy is usually worth it. See motor insurance explained.