Third Party Insurance and its working
Third Party insurance is basically a policy which is bought by the insured who is also known as the first party from the insurance company which is also known as the second party for the protection against the claims of another and they are referred as third party. Third-party insurance, which can also sometimes be referred to as ‘act-only’ insurance, is a statutory requirement for all vehicle owners as per the Motor Vehicle Act. This is a type of insurance cover where the insurer offers protection against damage to the third-party vehicle, personal property and physical injury. This policy does not provide any coverage to the insurer.
Understanding Third Party Insurance
Third-party insurance is actually a form of credit insurance. The first group is responsible for their injuries or losses, regardless of the cause of the damage. One of the most common types of third-party insurance is car insurance. The third party provides coverage against claims for damages and losses incurred by the uninsured driver, the principal, and is therefore not covered under the insurance policy. The driver who caused the damage was a third person.
There are two types of third-party car loan access:
- The liability for personal injury covers the costs incurred by the individual. These injury costs may include costs such as hospital care, lost wages, causing pain and suffering as a result of the accident.
- Damage to an asset includes costs incurred as a result of damage or loss of property. Examples of damage to property include compensation for replacing landforms and post boxes, as well as compensation for loss of property use.
As required by law, drivers must carry at least a minimal amount of physical injury and bear the burden of damaging property. A few provinces do not need both or have some restrictions. Each state imposes its minimum requirement on each type of cover.
Even in “innocent” situations, debt coverage is all that matters. No flawed laws were enacted to reduce or eliminate common injury cases with low price tags and a large number of claims of pain and suffering. However, flawless laws do not protect the insured in cases of $ 1 million in damages from the third most seriously injured people.
Both types of third-party insurance are important to the individuals such as homeowners, who have large assets to protect. When more money and property is insured, the limit should be higher for each type of credit cover.
In most countries, third party or credit insurance is a mandatory insurance for any third party that may be aided by a third party. Public credit insurance includes industries or businesses that participate in programs or other activities that may affect third parties, such as subcontractors, architects, and engineers. Here, third parties may be guests,or users of the facility. Many companies include public liability in their insurance portfolio to protect against property damage or personal injury.
Product credit insurance is usually regulated by law, the rate of which varies from country to country and is usually industry-specific. This type of insurance covers all major types of products and types, including chemicals, agricultural products, and leisure equipment and protects companies from litigation for products or materials that cause damage or any injury.
How does Third Party Insurance Work?
If the policyholder encounters an accident, the insurer provides financial assistance to cover the cost of repairing third party property. Therefore, it reduces the financial burden on the policyholder. In the event of an accident, the insurer must notify the insurance company about the accident before filing a claim.
Importance of Third Party Insurance
- Third-party insurance is a legal requirement. Therefore, having a third party cover allows the policyholder to comply with the legal obligation.
- While it is a basic form of coverage, it gives policymakers peace of mind knowing that they have adequate financial protection against the damages they may cause to the other people in accidents.
- Third-party car insurance protects the policy owner’s money from any form of accidental risks.
The first step in understanding how a third-party insurance cover works is to make a note of the words used. Other commonly used words associated with a third party cover include:
First party: The policyholder or the person who bought the insurance.
Second Party: An insurer or an insurance company.
Third Party : Claimant or the person who raises a claim for damages that are caused by the first party.
If the policyholder is involved in an accident with a third party, the policyholder is responsible for compensation for the damage or the injuries that are caused. In the event of an accident, the policyholder must notify the insurer immediately about the situation at the earliest possible.
Also, it is important that information is being collected about the accident and the insurer is provided with the following information:
- Description of the accident and the date and time.
- Details of insurers and policymakers present at the time of the accident.
- Describe the injuries sustained by the driver, passengers, and / or property or damaged vehicle.
- Details of witnesses.
- Weather and visibility status at the time of the accident.
- Evidence photos collected at the scene of the accident.
In the event of a police inquiry, provide the insurance company details and also provide them with the First Information Report (FIR) number, if available. In addition, if the accident was not caused by the policyholder, then the claimant may file a claim for car rental costs, repair costs, and compensation for damages in accordance with the terms of the insurance policy document.
Features of Third Party Insurance
- Third-party insurance provides a basic level of protection for all policyholders.
- It is also referred to as liability – only or act-only policy.
- It provides protection from legal liability to a third party that may arise as a result of the owner’s involvement in the accident. It restores personal injury, loss of life, and property damage to a third party.
- An important feature of this type of policy is that it has an affordable premium.
- Third-party insurance does not offer protection to the insured car itself.
The process to Claim Third Party Insurance
To get compensation from an insurance company, the policyholder must comply with the rules of the claim. The process of claiming third-party insurance includes the following steps:
- First and foremost, the insurer must notify the insurance company of the accident within a specified time, as stated in the policy document.
- The owner must file an FIR at the nearest police station where the accident took place, and obtain a copy of the same.
- Apply for a claim from a lender – complete the form, comply with the required documentations.
- Following the claim file, the insurer will send a surveyor to assess the damage and verify the estimated costs. Post assessment , the surveyor will submit the reports.
- According to the report, the insurer amends the claim.
