Motor insurance may sound like another boring financial product — till the day you actually need it
There are two parts to it. The first is straightforward — your own vehicle is insured for damage in an accident. The second, and often the more critical one, is the third-party (TP) liability cover. In simple terms, if your vehicle injures someone or damages someone else’s property, you’re legally responsible for compensating them. The TP policy steps in here — it pays on your behalf.
This cover isn’t optional; it’s mandatory under the Motor Vehicles Act, 1988. It’s considered a social legislation because it protects the accident victim (or their family, in case of death or disability).
Now, to clear the classic doubt — who’s the third party? You’re the first party, your insurance company is the second, and anyone else affected by your vehicle is the third. So, let’s say your car bumps into a scooter and the rider gets hurt. He can claim compensation from you, and your TP policy will handle it. Usually, though, these things don’t get sorted over a cup of tea — they land up before the Motor Accident Claims Tribunal (MACT), the special court for such cases.
Before that, of course, comes the usual round of police involvement — an FIR, medical records, details of vehicles, owners, drivers, insurance status… all the paperwork you can imagine. But before anything else, make sure the injured person gets immediate medical help. That’s always step one.
Now, let’s talk about what I think is the real benefit of TP insurance — the emotional relief. Once you inform your insurer or agent about the accident, they take over the entire bureaucratic headache. They’ll deal with the police, the tribunal, the lawyers — the works. You just cooperate, provide information, and stay out of the legal crossfire. When my car was hit by a bike at a traffic signal, I got a first-hand taste of this. I wasn’t at fault, but it was still a traumatic experience. Later, I realised how much more distressing it would have been without insurance — all those official processes, hearings, and possible harassment. The policy didn’t just protect my wallet; it protected my sanity.
Here’s one thing I learned the hard way — if yours is the bigger vehicle, the system tends to assume it’s your fault, even if it wasn’t. That’s how it works, unfair as it sounds. And here’s another bit of advice. After an accident, don’t offer money or compensation directly to the victim, no matter how guilty or pressured you feel. It may seem humane in the moment, but legally, it can be taken as an admission of fault — and that can complicate your insurer’s job (and yours).
What you should do is ensure the injured person gets prompt and proper medical attention. That’s both your moral and legal responsibility.
Everything else? Let your insurance company handle it. That’s what you’ve paid for — not just the coverage, but the calm that comes with knowing someone competent is handling the chaos.
(The writer is a business journalist specialising in insurance & corporate history.)
Published on November 17, 2025
