Definition
Third-Party Insurance
Third-party motor insurance covers the policyholder's legal liability for injury, death or property damage caused to others, but not damage to the insured's own vehicle.
Mandatory under Indian law, third-party (TP) cover pays compensation to victims and their families, often as awarded by Motor Accident Claims Tribunals. Liability for death or bodily injury to a third party is unlimited, while liability for third-party property damage has a statutory cap.
The TP premium is fixed annually by IRDAI based on engine capacity for cars and two-wheelers. Because it excludes the insured's own vehicle damage, owners usually add own-damage cover or buy a comprehensive policy for fuller protection.
Related terms
- Motor InsuranceMotor insurance covers financial liabilities and damages arising from owning and using a vehicle, and is mandatory in India for at least third-party liability.
- Own-Damage CoverOwn-damage (OD) cover compensates for damage to or loss of the insured's own vehicle from accidents, theft, fire and natural calamities.
- Comprehensive Motor InsuranceComprehensive motor insurance combines mandatory third-party liability cover with own-damage protection for the insured's vehicle in a single policy.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.