Question

Explain the main provisions of liability under third party insurance.

Hint:

Third party insurance = compulsory legal protection for others, not for own vehicle.

Answer 1

Third party insurance is mandatory under the Motor Vehicles Act for all motor vehicles in India.
It protects the insured against legal liabilities arising out of damage or injury to a third party.
The main provisions are:
1. Compulsory Coverage — The policy must provide minimum statutory coverage for third party injury or death and property damage.
2. Bodily Injury and Death — The policy covers unlimited liability for death or bodily injury to third parties caused by the insured vehicle.
This ensures that accident victims receive compensation.
3. Property Damage — There is a limit for third party property damage liability.
Currently, this limit is fixed by IRDAI guidelines.
4. Legal Costs — The insurer pays for legal expenses incurred by the insured in defending a claim in court.
5. Exclusions — The policy does not cover damage to the insured’s own vehicle or injuries to the owner-driver (unless covered separately).
It also does not cover contractual liabilities.
These provisions ensure that victims of motor accidents get financial support and the vehicle owner meets legal obligations.