Third-party insurance is a form of coverage that safeguards individuals against liabilities arising from damages caused to a third party. It is an essential component of responsible car ownership as it provides financial protection in case of accidents, property damage, or injury caused to others. Understanding the definition and importance of third-party insurance helps car owners recognize the significance of this coverage and its legal requirements.
The Indian car insurance market is a dynamic and rapidly growing sector. It operates under the guidance of the Insurance Regulatory and Development Authority of India (IRDAI) and comprises numerous insurance companies and aggregators. Providing an overview of this market enables car owners to understand the key players involved, the range of available options, and the competitive landscape in which they can make informed choices regarding their car insurance needs.
Understanding third-party insurance and its impact on car prices in India is the primary goal of this article. By delving into the intricacies of third-party insurance, the article aims to equip readers with knowledge about the coverage it offers, its legal requirements, and the factors that influence car prices. The article empowers readers to make informed decisions when selecting their insurance coverage, enabling them to strike a balance between adequate protection and managing the financial implications of car prices.
Third Party Car Insurance Price Comparison:
The IRDAI takes premium amount decisions for third party car insurance. When it comes to comprehensive car insurance, your insurers consider many things before deciding the premium amount. But the third-party car insurance price depends only on the cc of your car. The IRDAI has determined a fixed cost depending on the engine capacity of your motor vehicle.
Third party rates for private four-wheelers have also increased. From 1 June, the third-party premium for cars with an engine capacity of less than 1000cc will be Rs. 2,094. For a car with engine capacity exceeding 1000cc but not exceeding 1500cc, the third-party premium will be Rs. 3,416. For cars with an engine capacity of more than 1500cc, the third-party premium will be Rs. 7,897. The base premium for third-party insurance for unlimited liability for the various classes of vehicles is listed below:
| Private Cars with Engine Capacity |
| 1 Year |
Third Party Premium Rates (.approx) |
| Not Exceeding 1000cc |
Rs. 2072 |
| Exceeding 1000cc but not exceeding 1500cc |
Rs. 3221 |
| Exceeding 1500cc |
Rs. 7890 |
| 3 Year |
Third Party Premium Rates (.approx) |
| Not Exceeding 1000cc |
Rs. 5286 |
| Exceeding 1000cc but not exceeding 1500cc |
Rs. 9534 |
| Exceeding 1500cc |
Rs. 20,537 |
| Electric Car - Third Party Premium Rates (.approx) |
| Not Exceeding 30KW |
Rs. 1,628 |
| Exceeding 30kW but not exceeding 65KW |
Rs. 2683 |
| Exceeding 65KW |
Rs. 5732 |
"The figures provided are for user reference only. To obtain accurate third-party car insurance prices, it is recommended to compare quotes from different insurance providers."
What is Third Party Car Insurance?
Third Party car insurance is the only insurance made mandatory by Indian Law. It is a legal requirement under the Motor Vehicles Act, 1988 for any car owner or driver to drive their vehicle on a public road. The third-party car insurance gives you coverage from financial liability in case your vehicle was involved in any accidents that might have caused damages to life, limb, other vehicles, or property. This type of car insurance is also known as 'act only cover. It reduces the worries of the car owner in case of financial liability towards the third party in case of an accident.
- Compensation in case of death and injury is up to Rs. 7.5 lakhs
- Lower premiums
- You no longer have to worry about paying someone else’s repair bills.
Benefits:-
- Third Party Liabilities: Any injuries or damages caused to a third party are covered.
- Third Party Property Damages: Any damages caused to a third party’s property due to your car in an accident are covered. However, the coverage limit is 7.5 lakhs.
- Third Party Car Damages: Any damage caused by your car to a third party’s vehicle is covered.
- Personal Accident Coverage: A few companies provide compensation in case your car accident results in your disability or death. The cover amount in case of death can is up to 15 lakhs.
- Accidental Death Coverage: Compensation is provided in case you accidentally run over your car on a person causing fatalities leading to the victim’s death.
- Bodily Injuries Due To Accident: Any disability caused by you to a third party due to an accident is covered. However, only 50% of the compensation is paid in case the third party person suffers from partial blindness or loss of a limb.
| Type of Damage |
Compensation |
| Loss of Life |
Unlimited |
| Loss of Limb/ permanent disability |
Unlimited |
| Injury |
Limited to medical expenses |
| Property Damage |
Up to INR 7,50,000 |
Third Party Car Insurance Cost:
In India, third-party insurance is a mandatory requirement for all vehicle owners as per the Motor Vehicles Act, of 1988. Third-party insurance provides coverage for any damages or injuries caused to a third party (individuals or properties) due to an accident involving the insured vehicle. The Insurance Regulatory and Development Authority of India (IRDAI) regulates the premium rates for third-party insurance. The premium structure for third-party insurance is determined based on the following factors:
- Engine Capacity: The premium rates are categorized according to the engine capacity of the vehicle. There are different slabs for vehicles with engine capacities up to 1000cc, 1001cc to 1500cc, and above 1500cc.
- Seating Capacity: The number of seats in the vehicle also affects the premium rates. Higher seating capacity vehicles usually have higher premiums.
- Age of the Vehicle: The age of the vehicle is considered while calculating the premium. Older vehicles generally have lower premiums compared to newer ones.
- Geographical Zone: Premium rates can vary based on the geographical zone in which the vehicle is registered. Different zones may have different accident rates or risk factors, influencing the premiums.
Comparison of Third-Party Insurance Prices for Popular Car Models:
- Entry-level hatchbacks: Entry-level hatchbacks are usually small cars with engine capacities up to 1000cc. The third-party insurance premium for these cars is relatively lower compared to other categories. As of my knowledge cutoff in September 2021, the approximate annual premium for an entry-level hatchback could range from Rs. 2,000 to Rs. 4,000.
- Sedans and compact SUVs: Sedans and compact SUVs generally have higher engine capacities (1001cc to 1500cc). The third-party car insurance prices for these vehicles are higher than entry-level hatchbacks. The approximate annual premium for sedans and compact SUVs can vary from Rs. 4,000 to Rs. 7,000.
- Luxury and high-end vehicles: Luxury and high-end vehicles have larger engine capacities (above 1500cc) and higher car prices. Consequently, their third-party insurance premiums are significantly higher compared to smaller cars. The approximate annual premium for luxury and high-end vehicles can range from Rs. 10,000 to Rs. 30,000 or more, depending on the specific car model and its value.
Car price indirectly affects third-party insurance premiums. Since the premium rates are based on engine capacity and other factors, a higher-priced car generally has a higher engine capacity, resulting in higher premiums. However, it is important to note that third-party insurance premiums are not directly proportional to the car price. Other factors like seating capacity, age of the vehicle, and geographical zone also play a role in determining the premiums.
| Car Models |
Third Party Premiums |
| Entry Level hatchbacks |
Rs. 2,000 to 4,000 |
| Sedan and Compact SUVs |
Rs. 4,000 to 7,000 |
| Luxury and High-end vehicles |
Rs. 10,000 to 30,000 |
*The values provided above are intended for user reference purposes only. To obtain precise readings, it is recommended to compare quotes from different providers for third-party car insurance.*
Factors Influencing Third Party Insurance on Car Prices in India
Insurance plays a significant role in determining car prices in India. Insurance costs are factored into the overall expenses associated with owning a car. When a car is purchased, the buyer needs to consider the cost of insurance coverage for the vehicle. Insurance companies assess the risk associated with the car model, which can impact the insurance premium. Cars with a higher risk of accidents or theft may have higher insurance premiums, which can influence the overall price of the vehicle.
Third-party insurance is a mandatory requirement for all vehicles in India. The Insurance Regulatory and Development Authority of India (IRDAI) determine the third party car insurance price. Since third-party insurance is mandatory, the premium cost is factored into the overall price of the car. Thus, the inclusion of third-party insurance can have a direct impact on the final price of the car. Insurance companies consider several factors when calculating the premium for comprehensive insurance coverage. These factors may vary among insurers but commonly include:
- Vehicle make, model, and age
- Engine capacity and power
- Geographical location and accident-prone areas
- Previous claims history
- Insured Declared Value (IDV) and its impact on premiums
It is important to note that these factors can vary among insurance companies, and different insurers may consider additional factors or have their own specific calculations for determining third party car insurance prices.
| Top Companies |
Third Party Prices |
| New India Assurance |
3849 |
| ICICI Lombard |
4262 |
| United India |
3193 |
| Oriental |
3293 |
| National |
5292 |
*The above-mentioned values are for user reference purpose only. For exact readings compare third party car insurance quotes.*
Third Party Car Insurance Premium Calculator:-
PolicyBachat car insurance premium calculator is an online tool that allows you to calculate a customized premium amount for your car insurance policy. All you need to do is enter details like your car’s make, model, variant, RTO location, purchase year, etc. and the premium amount will be calculated. A car insurance premium calculator helps you know the actual premium, which you should pay for getting a car insurance policy from different car insurance companies. This helps you in comparing the available car insurance quotes easily and make the right decision.
Third-party car insurance premium is calculated based on several factors determined by the Insurance Regulatory and Development Authority of India (IRDAI). For example, Mr. A wants to purchase a car insurance policy for his Hyundai i10 Asta, which has the following details:
- Engine Capacity: 1197 cc
- Fuel Type: Petrol
- Registration City and Year: Noida and 2018
- NCB: 20%
- Policy Tenure: 1 Year
The key factors considered in the calculation include-
| Factors |
Values |
| Ex-showroom Rate |
8.5 Lakh |
| Depreciation |
3.2 Lakh |
| Insured Declared Value |
3.3 Lakh |
| Own Damage Premium |
Rs. 5,212 |
| Third party Premium |
Rs. 3,416 |
| No Claim Bonus |
20% |
| Premium |
Rs. 8262 |
"The figures provided are for user reference only. To obtain accurate third-party car insurance prices, it is recommended to compare quotes from different insurance providers."
Understanding the Importance and Coverage of Third Party Car Insurance Prices
Car insurance cost of third party premium is decided by the IRDA and is constant for all the insurance companies. Third party premium changes with the cubic capacity and the age of the vehicle. Third party premium rates are decided by IRDA and are subject to change each year depending on the previous year's premium collected, claims settled, and many other factors. Car insurance rates would increase if your car were fitted with the Bi-fuel system and other electrical and nonelectrical accessories. Both the own damage and third-party premiums would be increased in this case.
- Compulsory TP: The Motor Vehicles Act, 2019 has made it mandatory for the owner of the car to have at least a third party insurance if not comprehensive insurance cover. The fine for not having the compulsory third party car insurance is up to Rs.5000/- and/or imprisonment of up to 3 months. There are three slabs for the third party car insurance premium depending on the cubic capacity of the car. The highest premium to be paid for a car would typically not be more than Rs.10k which provides coverage for a year. Having Third party insurance can save your hard-earned money from being paid as a fine and prevent you from imprisonment.
- Death and Disability Claim: The death and disability accidental claims are covered under the third party car insurance policy. In general the third party claims are to be reported to the insurance companies and will be settled by the honorable courts. The amount of compensation to be paid by the insurance companies to the kin of the deceased is decided by the honorable courts after taking many factors into consideration. These factors include the earning capacity of the deceased and other factors such as the age of the deceased etc.
In the absence of a third party car insurance policy, the compensation awarded by the honorable courts for third party death and disability claims should be settled from your own pocket. There can be instances where the courts action your property to settle the third party claims in the absence of valid third party insurance.
- Property damage claims: The third party property damage due to your car is covered under the third party car insurance policy. The Third party property damage is covered up to Rs.7.5Lacs under the third party car insurance. The limit under this section can also be restricted to Rs.6000 for a decrease in the overall premium to be paid under your third party car insurance policy.
- Personal accident cover for owner/driver: Personal accident cover for owner/driver is mandatory for a sum insured of Rs.15 Lacs to be taken under the compulsory third party car insurance policy. The personal accident cover for the owner/driver covers the claims due to the death or disability of the owner/driver at the time of accident whilst driving the insured vehicle.
- Need for Third party car insurance: The need for a valid third party car insurance has increased these days due to the increasing road accidents resulting in the loss of lives of the passengers. A third party car insurance death claim may result in the loss of more than one life and the claim amount may run up to several Lacs in some instances where the car owner/driver might not be able to pay without the help of the insurance company.
Outcome:
In conclusion, third-party insurance holds significant importance in India as it is mandatory for all vehicles under the Motor Vehicles Act. It provides coverage for damages or injuries caused to third parties in accidents involving the insured vehicle. The inclusion of third-party insurance directly impacts car prices, as the insurance premium is factored into the overall cost. Factors such as vehicle make, model, age, engine capacity, geographical location, and previous claims history influence the premium calculation. Car buyers should consider the cost of insurance while assessing the overall price of a vehicle. It is advisable to research and compare insurance premiums from multiple insurers to make an informed decision. By understanding the factors influencing insurance premiums and considering them alongside other factors like car features, maintenance costs, and resale value, car buyers can make a well-informed purchase decision that aligns with their budget and insurance needs.