In this world full of uncertainties, individuals are often posed with the threat of changing scenarios. With a view to cover the losses caused by such events, insurance policies are taken up by people. Insurance is an indemnity contract where the insuring party undertakes to pay a specified amount on the occurrence of contingent event in order to diminish its impact. Different insurance policies are available like life, health, fire, marine, motor, etc.
Motor insurance safeguards the owner of the vehicle against the following:
- damages to his/her vehicle and
- pays for any Third-Party Liability determined as per law against the owner of the vehicle.
Third Party Insurance
The owner of the vehicle is liable for any injury or damage to third party life or property caused by or arising out of the use of the vehicle in a public place. Motor insurance covers the third-party liability as well. Third party insurance has the below stated features:
- Mandatory in terms of the Motor Vehicles Act, 1988 without which driving a motor vehicle in a public place is a punishable offence.
- Does not cover the injuries incurred to the insured;
- Protects the interests of the injured third party affected due the use of the vehicle of the insured;
In the news.1
Considering the safety of third party-victims, the Insurance Regulatory Authority of India (hereinafter referred to as "IRDA") based on recommendations of the Supreme Court panel has made it mandatory to extend the duration of motor third party insurance to five years for new two-wheelers and three years for a newly purchased car, September 1, 2018 onwards. The damage premium would now be calculated by IRDA which was earlier determined by insurers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.