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Liability-only Car Insurance – Everything You Need to Know

  • Author :
  • TATA AIG Team
  • Published on :
  • 18/11/2021

Liability-only car insurance, also known as a third-party car insurance policy, is a mandatory requirement for all cars in India. As per the Motor Vehicles Act of 1988, all vehicles in India must have liability-only car insurance online for driving. Anyone found driving without a third-party car insurance policy will be liable to pay a fine as per the rules.

Liability-only car insurance protects you financially against any third-party vehicle damage, property loss and death or bodily injury caused to the third party. Liability-only insurance is cheap liability-only four-wheeler insurance. The premiums of this car insurance policy are economical than any other car insurance.

However, the coverage and benefits of the liability-only car insurance online are also limited as it only covers third-party liabilities - injuries to a third party, damages caused to a third-party property/vehicle, and death of a third party. It does not cover any own-damage to the insured vehicle or injuries/death of the owner-driver.

Hence, when getting a quote for car insurance online, understand the different types of car insurance before making the purchase decision.

What is A Liability-Only Car Insurance?

Here is everything you should know about liability-only car insurance:

A liability-only car insurance policy is a contract between the insurance company and you, where the former provides you financial protection against any unforeseen accidental liabilities caused due to third-party damages, property loss, death, or bodily injury. Also known as liability-only car insurance, this is one of the cheap liability-only four-wheeler insurance policies because the premiums for this plan is the lowest. However, a liability-only insurance policy for cars only offers financial protection against any third-party claims and not for your life or any damage sustained by the insured vehicle.

Typically, there are three stakeholders in liability-only car insurance online:

  • First Party - The car owner buys the car insurance policy and agrees to pay a defined premium to the motor insurance company. This person is known as the policyholder.

  • Second Party - The motor insurance company promises financial protection to the owner of the insured vehicle in exchange for premiums.

  • Third Party - The third party is any other person who has suffered a loss or damage to life or property because of the policyholder’s car.

Liability-only car insurance is a legal contract between the policyholder and motor insurance company, where the latter agrees to pay for any legal liabilities due to a third party in return for premiums. Liability-only car insurance online does not cover any damages or loss sustained by the policyholder’s car. This car insurance does not provide financial protection for any injury, disability or death of the policyholder.

What is Covered Under Liability-Only Car Insurance?

A liability-only car insurance online policy provides coverage for the following aspects:

  • Third-party vehicle damage or loss: In a car accident, if you damage the vehicle of another person, you are liable to pay for the damages, as per the law. However, if you have a third-party car insurance policy, the insurance company will pay the third party for the damages sustained by their car.
  • Third-party property damage: Car accidents can often cause you to collide with another person’s property and cause damage to it. As per law, you have to reimburse the loss sustained by the third-party property. However, with a liability-only car insurance plan, you can be at peace because the insurer will pay for the damage repair of the property.
  • Third-party body injury or death: If a road accident caused by your car results in bodily injury of the third party, you are liable to pay for their medical expenses. With a liability-only car insurance policy, your insurance company will sponsor the medical treatment of the third party on your behalf. Unfortunately, if the car accident results in the death of the third party, the insurer will also pay compensation to the victim’s family on your behalf.

How does Liability-only Car Insurance Work?

The primary purpose of a liability-only insurance policy for a car is to reduce the financial burden of the vehicle owner in case of an accident that causes damage to another person’s life, property or vehicle. This is a basic car insurance plan which is a mandatory requirement for all vehicles in India.

Claiming liability-only car insurance online is simple. In case you meet an accident that causes damage to another person’s life, property or vehicle, inform your insurance company about the incident. Ensure to inform the insurance company within the stipulated time to avoid any delay in claim processing.

Once you register your case with the insurance company, you will have to follow a simple process to raise the claim under your car insurance policy. It is beneficial to take photos and make videos of the incident and the damage caused. Upon claim registration, the insurance company will send a surveyor to assess the situation and file a report regarding the damage or loss incurred by the third party. The surveyor will submit the report to the insurance company, which will then begin the claim process. During this process, you might need to submit some documents like your driver license, registration papers of the car, etc.

Once the claim is approved by the car insurance company, the insurer will pay the liability or compensation to the third party on your behalf. You will not be liable to pay anything to the third party.

What are the Benefits of Buying a Liability-only Car Insurance Policy?

Buying liability-only car insurance online has its benefits. These include:

1. Abiding by the law: As per the Motor Vehicles Act of 1988, third-party insurance is mandatory for all vehicles driving in India. Hence, if you buy liability-only insurance for a car, you will be complying with the legal mandates of driving a vehicle in India.

2. Financial and legal protection: Liability-only insurance policy for cars provides financial and legal protection to you against any third-party claims. If a car accident causes any damage or loss to third-party property, vehicle or life, your car insurance policy will pay for the damages or compensation on your behalf. This relieves you of the financial burden and associated legal liabilities.

3. Peace of mind: A liability-only car insurance online policy gives you the peace of mind that in case of an unfortunate event, creating a financial liability to another person, you have reliable financial support. Hence, you do not have to worry about these expenses or stress about arranging money to deal with the incident.

4. Cost-effective: Third-party insurance is a cheap liability-only four-wheeler insurance policy. The premiums of this plan are significantly lower than other car insurance policies like a comprehensive insurance plan.

5. Easily accessible: A liability-only insurance policy for cars is mandatory in India for all vehicles. Hence, this particular policy is available online at highly affordable premiums. You can buy or renew a liability-only insurance policy for a car online within minutes.

Overall, a liability-only insurance policy for cars ensures you comply with the law and stay financially stress-free in demanding situations like a road accident. However, as a responsible driver, it is beneficial to invest in comprehensive car insurance rather than liability-only car insurance online. A comprehensive car insurance policy offers you third-party liability protection along with financial security for your vehicle and life.

If you own a vehicle, you can buy a liability-only policy from Tata AIG car insurance at affordable premiums. Tata AIG liability-only car insurance offers financial protection for third-party loss, damage and death or bodily injury. You can get a quote for car insurance online and buy or renew a car insurance policy at your ease and convenience.

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