Motor Insurance: A large number of vehicles on Indian roads are still uninsured. It’s estimated that more than half of all vehicles lack valid insurance. In the event of an accident, vehicle owners may incur significant expenses such as repairs, medical treatment, or legal compensation. This is why motor insurance, especially third-party insurance, is essential for every driver.
Types of Motor Insurance
There are two main types of motor insurance. The first is a comprehensive policy, which covers damage to your own vehicle as well as damage to third parties. The second is third-party insurance, which applies only if your vehicle causes damage to another person, vehicle, or property.
While purchasing comprehensive insurance is a matter of choice, third-party insurance is legally mandatory. Driving on a public road without third-party insurance is considered a crime under the Motor Vehicles Act, 1988.
What is Third Party Insurance?
A third party refers to someone other than the vehicle owner or driver, such as a pedestrian walking on the road, a passenger in another vehicle, or the driver of another vehicle. If your vehicle causes injury, death, or property damage to someone, third-party insurance compensates for that loss.
This insurance involves an agreement between the vehicle owner and the insurance company, under which the company compensates the third party affected by the accident. This relieves the vehicle owner of a significant financial burden.
Why is it mandatory?
By law, third-party insurance is mandatory for every motor vehicle. Driving without insurance can result in fines, penalties, or even vehicle seizure. Most importantly, in the event of an accident, the vehicle owner bears the entire responsibility for compensation, which can sometimes amount to lakhs or crores of rupees.
Premium Requirements
For information, the base premium for third-party insurance is determined according to government regulations. It is the same for all insurance companies.
For two-wheelers, the annual premium is determined by engine capacity. For bikes up to 75 cc, the premium is approximately ₹538, for 75 to 150 cc, approximately ₹714, for 150 to 350 cc, approximately ₹1,366, and for cars above 350 cc, approximately ₹2,804.
For private four-wheelers, the annual premium is approximately ₹2,094 for cars up to 1,000 cc, approximately ₹3,416 for cars between 1,000 and 1,500 cc, and approximately ₹7,897 for cars above 1,500 cc. This amount covers legal liability for third-party damage.
Long-Term Policy Options
Insurance companies also offer long-term third-party policies. Coverage is available for three years for new cars and five years for new two-wheelers. This eliminates the hassle of frequent renewals and often reduces the overall cost.
Why Awareness Is Important
A large number of people in the country still ignore the importance of insurance. Third-party insurance isn’t just a legal formality, but a powerful tool for financial security. A small negligence can lead to a significant financial crisis. Therefore, every vehicle owner should obtain at least a minimum of third-party insurance to protect themselves and others in the event of an accident.