What is Third-Party Insurance Cover and How Does it Work?
Third-party insurance, as the name suggests, is an insurance policy that aims at protecting the policyholder against any and every liability, involving a third party. In insurance terminology, the first party is the policyholder, the second party is the insurance company and the third party is any individual involved in an accident caused by the first party, i.e, the policyholder. The insurance company, in case of a mishap, protects the policyholder against any losses or damages caused to the third party. Further, the third party is compensated by the insurer, based on the losses or damages suffered. Car insurance is mandatory in almost all states in the US. In Illinois, if you have been convicted of driving without insurance, you would be required to carry an sr22 insurance Illinois which certifies that you carry at least the state-required car insurance coverage.
Third-party insurance is the basic and compulsory requirement for all vehicle owners, as mandated by the Government of India, under the Motor Vehicles Act of 1988. Since this is the basic and mandatory policy, the policy and premium costs are considerably lower, in comparison to the other policies. This also has to do with the fact that the policy does not provide any coverage for the damages or losses suffered by the policyholder.
What does the Third-Party Insurance cover?
All insurance policies are designed to offer complete protection to the policyholder. However, the policies also have certain terms and conditions which makes it fair to both the insurer and insurance provider. Here are the inclusions and exclusions of the third-party insurance plan.
The third-party insurance policy intends to protect the insured individual against:
- Damages or losses of the third party caused by the insured vehicle
- Damages or losses of the third-party vehicle or property caused by the insured vehicle
- Physical damages, permanent or temporary disability damages the third-party by the insured vehicle
- Any liabilities following the death of a third-party caused by the insured vehicle
The third-party insurance policy does not protect the insured individual if he/she was:
- Driving under the influence of alcohol or any other intoxicating substances
- Driving without a valid driving license
- Driving without a valid insurance policy
- Using the vehicle for any commercial purposes or any other illegal activities
- Driving with an intent to cause harm to the other person
- The vehicle gets stolen
How does Third-Party Insurance work?
All the proceedings and formalities have been simplified over the years to make it easier for the insured to make their claims. If the policyholder meets with an accident, they are expected to inform their insurance provider immediately, ahead of filing for a claim.
While informing the insurer of the accident, the insured is to provide the details such as:
- Time and date of the accident
- Policy details of both the parties involved
- Description of the damages or losses suffered by both the parties
- Witnesses, if any
- FIR number
- Photographs taken etc.
After the claim is filed, an approved surveyor assesses the damages to confirm the authenticity of the claim and to report the estimated cost for the repairs. After the verification process is complete, the insurer settles the claim.