What is the meaning of 3rd Party Insurance?
Motor third-party insurance cover is basically a statutory requirement as per the Motor Vehicles Act. It is also known as third-party cover or just act-only cover. It is so named as the beneficiary of the policy is not the one from two parties under contract i.e. the car owner or the insurance company. Thus it does not give any insurance benefit to the insured but instead takes care of insured person’s legal liability for death/disability of third-party loss or damage to property of third-party.
This is a mandatory cover and all non-life insurance companies are under obligation to extend this cover. In India, all automobile dealers make arrangements for an elaborate insurance cover along with the vehicle registration. This is in addition to the compulsory third-party insurance and thus protects the car owner from any financial losses resulting from damage or theft.