Your precious car needs to be protected, and one of the effective ways to ensure its safety is to be equipped with the knowledge of vehicle insurance. Motor insurance in India is compulsory; you should know all about liability-only car insurance, which has been mandated by the Motor Vehicles Act of 1988. 

This statutory requirement provides compensation to the individual who bears the brunt of an accident caused by the insured vehicle. 

The core of liability-only insurance coverage is to cater to the financial requirements of the party adversely affected because the insured car was involved in an untoward incident. 

Let us understand the basics of a third-party insurance policy for a car and see what the best liability-only car insurance should cover. 

What is Liability-Only Car Insurance?

Let us first understand the different parties in motor insurance:

• The owner of the insured vehicle is the first party. 

• The car insurance company is the second party in this plan as it agrees to provide monetary security to the insurance policyholder, provided the owner makes payments of the premiums. 

• In case the policyholder’s vehicle is involved in an accident, the individual who suffers property or physical damage due to the accident is referred to as the third party. 

Liability-only car insurance, commonly known as third-party car insurance, is a vehicle insurance scheme in which, when the insured car causes damage to an individual or their property, then the insurer steps in to financially compensate that individual or their property, provided it falls within the policy terms. 

Even the cheapest liability-only car insurance covers the expenses required to cover the damages caused to a third party. 

Note that this insurance policy for a car does not cater to the policyholder’s financial requirements but instead provides financial compensation to the third party in case of disability, injury or even death caused due to your insured car. 

Liabilities Covered Under Third-Party Car Insurance

Opting for third-party car insurance helps you abide by the law as well as keep legal liabilities at bay. The liabilities that this insurance policy covers include:

• The financial liability that you face in case a person dies due to an accident caused by your vehicle.

• The financial liability you encounter if a person’s property is damaged because of your insured car.

• The financial liability that comes your way because a person goes through physical injury caused by your vehicle for which you buy this insurance.

Remuneration Provided Under Liability-Only Car Insurance

Under a third-party liability-only car insurance policy in India, the financial remuneration provided is primarily for covering the liabilities arising out of damages or injuries caused to a third party. 

The key aspects of coverage and remuneration are as follows:

• Bodily Injury or Death of a Third Party: The insurance company compensates for injuries or deaths caused to a third party by the insured vehicle. The compensation amount is determined by the court based on various factors, such as the age and income of the deceased or injured person.

• Property Damage: For damages to a third party’s property, the compensation is typically capped. As per the Insurance Regulatory and Development Authority of India (IRDAI), the limit for third-party property damage is usually up to ₹7.5 lakhs.

• Legal Liability: The policy also covers the legal expenses incurred in defending a claim made by a third party.

Liability-only Car Insurance – Legal Requirements

Legally, you can apply for this vehicle insurance type if:

• You are an Indian citizen.

• Your driving licence is valid.

• You are the owner of a vehicle that is registered.

• You are 18 years or above in age.

Third-party Car Insurance - Benefits and Limitations

Benefits of Liability-only Car Insurance

• This insurance coverage can be advantageous for new drivers who intend on following the law with a cost-effective insurance plan.

• Again, individuals who are on a budget or have very little to spare can opt for this insurance policy for their vehicles.

• Additionally, owners of old cars can buy this plan to spend as little as possible on their insurance expenses, especially as their cars lose their financial value over time. 

• Among the different types of car insurance coverages, this insurance is easily available at reasonably priced premiums because it is legally mandatory to buy it. 

• Additionally, investing in this highly affordable vehicle insurance policy will ensure that you are at peace when driving your car.

Limitations of Liability-only Car Insurance

• This insurance cover compensates only the third party, be it medical cover or property damage cover, in case the insured car is involved in an accident. No financial compensation is provided to the policyholder. 

• This insurance policy does not provide compensation in case the insured vehicle is damaged due to natural calamities or man-made situations like theft and riots. 

Liability-only Insurance Coverage vs. Comprehensive Coverage

Conclusion

Liability-only car insurance provides basic coverage to include a third-party person or property damages. It is a good option for people looking for a low-budget policy with minimum coverage. Also known as third-party insurance, this policy helps you meet the legal mandate of insuring your car. 

Choosing Reliance General Insurance for your third-party car insurance will help you get affordable premiums for this insurance policy. 

Moreover, to ensure your personal protection, we offer you the option of opting for Stand-Alone Own-Damage Cover and Personal Accident Cover to keep you financially protected in case of an accident. 

With Reliance General Insurance, you can choose from third-party car insurance, own-damage car insurance and comprehensive car insurance. 

Browse our types of car insurance coverages today to choose the coverage and policy price that matches your insurance needs. 

Frequently Asked Questions (FAQs)

1. Is liability-only car vehicle insurance the only vehicle insurance option?

While it is mandatory to invest in vehicle insurance that covers third-party physical or property damage, third-party insurance is not the only option for you. 

Comprehensive coverage helps you financially protect your vehicle in case of damage caused due to accidents, natural disasters, robbery and other untoward incidents, along with providing third-party liability coverage. 

2. ​​Can I personalise a liability-only insurance policy?

Third-party insurance policies do not offer the option of add-ons that are available for other car insurance policies, such as zero depreciation cover, engine protector cover or roadside assistance. 

However, at Reliance General Insurance, we provide personal accident cover along with this policy so that you can be spared the financial burden in case of an accident. ​