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Motor Insurance ~ Things That You Didnt Know About 3rd Party Liability

Many amongst us buy car insurance because it is mandated by regulation. However, a lot of us still do not know that 3rd party liability insurance will suffice if their intention is just to meet regulatory requirements. Comprehensive insurance, a highly popular and costlier product, is not required in this case.

Allow me to be a bit technical here in order to explain what is expected of a vehicle owner - Section 147 of the Motor Vehicles Act, 1988 requires that the policy of insurance must provide cover -
~ against any liability which may be incurred by the insured in respect of death or bodily injury to any person, including the owner of the goods or his authorized representative carried in the carraige; or
~ damage to any property of a third pary; or
~ against death or bodily injury to any passenger of a public service vehicle, caused by or arising out of the use of the vehicle in a public place.

Moreover, a lot still do not know what a 3rd party liability insurance means. In a small survey that we conducted among 75 participants, we found that hardly 2% knew what they would be getting when they bought a liability insurance only. Among other things, liability policy also protects fare paying passengers of an auto-rickshaw, bus, ambulance, taxi etc. There are regulations regarding the limit of liability -
~ There is unlimited liability for third party death or personal injury
~ In respect of damage to any property of a third party out of one accident, there is a limit of Rs 6000

The premium collected in liability insurance is diverted by all insurers to a pool (Motor TP pool) whose fund is managed by GIC (General Insurance Corporation). The administration of the underwriting and the claims are managed by the respective insurers at all stages including settlement. On settlement, insurers submit details of claim settled and recover their share of payment from the pool.

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Authored by: BuySmartPolicy
Published date: March 28 2018.

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