Simply Put. Why third-party cover is mandatory

Two neighbours’ daily routine of watering plants leads to an interesting conversation

Sindu: We were away for a few days and all the new saplings have dried up!

Bindu: Yes. We should have predicted this and arranged for sufficient water. Maybe even added some manure for protection.

Sindu: Like an insurance policy, you see.

Bindu: Yes. Like a third-party motor insurance, mandatory arrangements for the saplings!

Sindu: While I agree that having a motor insurance policy is important, I thought it was optional.

Bindu: Well, own damage (OD) cover is optional. It covers damage to your vehicle due to accidents, theft/vandalism, fire, natural calamities and man-made disasters. It even provides accident cover to the owner. Third party (TP) cover, provides coverage against legal liability that arises during an accident and is mandatory.

Sindu: Basically you are saying, it is unlawful to drive around without TP cover, but OD cover is my choice.

Bindu: Yes. TP rates are decided by the insurance regulator, IRDAI, and are fixed across insurance companies (for a particular vehicle), while insurers have the flexibility to decide on the OD cover premiums. You can buy TP covers for three years when you purchase a car (five years for two-wheelers)

Sindu: Okay. So what does TP policy cover?

Bindu: The coverage is similar across insurers. It covers death or bodily injury to the third party, damage to third party vehicle because of your vehicle. Some insurers even provide damage to third-party property up to the policy cover limit.

Sindu: How does it work?

Bindu: If a policyholder gets involved in an accident, then he/she should inform the insurer immediately before raising a claim. You will have to file an FIR with the police and get a copy of it. Then you will have to submit the claim form, along with the FIR copy and other documents to your insurer, who will then send a surveyor to assess the damage. The entire submission process can be done online. After verification, the insurer pays off the claim amount. The process is similar for an OD cover, only you may not require filing an FIR.

Sindu: Well, I have to check if I have an OD cover. Else, I’ll have to buy one.

Bindu: Sure. Next time you renew your motor insurance, you can consider buying a comprehensive cover.

Sindu: I suppose it provides both TP and OD covers?

Bindu : Yes. Not only that; you can also customise your policy based on your needs. It comes at additional cost.

Sindu: Yes, of course, no free lunch I guess!

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