Third-Party Motor Insurance Explained Simply – Rules, Fines, FAQs

These rules were created to ensure that every vehicle present on the public roads has third-party insurance as a statutory requirement as per Indian law.

🔍 Definition of Third-Party Insurance

It is motor insurance that protects one from legal liability in case any of the following are caused by your vehicle:

• Injury or death of another individual
• Destruction of someone else's property

It does not cover destruction that happens to your vehicle.

✅ Important Overview:

• Compulsory on Every Vehicle
  Every vehicle, including car, bike, motorcycle, etc., shall be covered under it before driving it legally on the road.
• Without it, unable to Register or Drive
  It will be a punishable offence subject to a fine or imprisonment if caught driving without valid insurance.
• IRDAI Fixes Premium Rates
  The insurance regulator determines the price every year according to the type and size of engine.
• Long-term Insurance Offered for New Vehicles
  It has been made mandatory for new vehicles, irrespective of type (cars or motorcycles), to obtain third-party insurance coverage for three years (for motorcycles) or five years (for cars).
• Insurers should Provide Policies Without Delay
  Insurance companies have a legal obligation to provide third-party insurance without delay or denial.
• Online and Instant Options Available
  You can just buy it online within minutes, even at the time of registration.

Motor Vehicles (Third Party Insurance) – FAQs

1. What exactly is third-party insurance?

It is the insurance which encompasses an injury, death or damage to a property because of the act of your car to another entity.

2. Is it mandatory to have third-party insurance?

Yes, you are not allowed to drive any vehicle on Indian law roads without it.

3. Will third-party insurance pay for any damage to my car or bike?

No. It covers only the loss of the other person, not yours.

4. What happens when I drive without third-party insurance?

You may be fined up to ₹2,000 or even imprisoned for up to 3 months.

5. I bought a bike just now. Should I get third-party insurance straight away?

Yes. You should purchase it before taking the vehicle on the roads.

6. Can I procure third-party insurance online?

Yes. Many companies do provide this online; policy is available instantly.

7. For how long is third-party insurance valid?

Usually for 1 year; however, for new vehicles, it will be 3 years valid in the case of bikes and 5 years in the case of cars.

8. Who sets the price of this insurance?

The IRDAI yearly fixes rates for this insurance.

9. What will happen if someone hits me and I incur injuries?

The other driver, having a third-party insurance facility, can reclaim the amount on them.

10. My friend's borrowing my car and causing an accident. Am I to bear the cost's liability?

Yes. The insurance follows the vehicle, not the driver.

11. Can I just get third-party insurance and drop full coverage?

You can, yes, but note that damage to your own vehicle won't be covered unless you buy a comprehensive policy.

12. I forgot to renew my third-party insurance. What now?

You need to renew it straightaway; it is illegal to drive without it.

13. What is the advantage of third-party insurance for me?

Generally, it is legal coverage and can spare you the possible burden of compensation costs from your pocket should one injure someone.

14. It includes accidents from my driver as well.

Yes, provided the vehicle is insured and has a valid driving licence with the driver.

15. Can there be a circumstance in which the insurance company won't give me third-party insurance?

No. They are obligated by law to give it in case the application is made.

16. Will I get fined for expired insurance even if it was never impounded?

Yes. There can be a fine even if kept parked in a public place and uninsured.

17. What documents do you require to buy third-party insurance?

Usually your RC, ID proof, and your vehicle-related documents are the only things needed.

18. Is third-party insurance too costly?

No, mostly it's pretty cheap – much cheaper than what legal compensation would cost.

19. What are the ways to claim insurance if I knock someone else's vehicle?

Inform your insurer right away and follow the procedure for third-party claim settlement.

20. What if my insurance policy is fake?

You will be fined or put in jail, so always buy through trusted sources or official insurer websites.