What is Liability-Only Coverage and What Does it Include?

If you own a car, having car insurance should be at the top of your to-do list. In India, it is mandatory to have vehicle insurance, and liability-only coverage is the minimum coverage required as per the Motor Vehicles Act of 1988. Liability car insurance is a type of vehicle insurance that covers damage and injuries you cause to other people and their property. In this article, we'll take a closer look at what liability-only coverage is, what it includes and excludes, and why it's important to have.

What is Liability-Only Coverage and What Does it Include?

Liability-only coverage is also known as third-party car insurance, as it only covers damages and injuries to third parties. It is the minimum coverage required by law in India, and it provides financial protection in case you cause damage to someone else's property or injure them in an accident. Liability car insurance does not cover damage to your own vehicle or injuries you sustain in an accident. Liability-only coverage includes two main types of protection: third-party property damage and third-party bodily injury. Let's take a closer look at each of these types of coverage.

1. Third-Party Property Damage

This type of coverage provides protection if you damage someone else's property in an accident. For example, if you collide with another car and damage it, your liability-only coverage will pay for the cost of repairing or replacing the other car. *

2. Third-Party Bodily Injury

This type of coverage provides protection if you injure someone else in an accident. For example, if you collide with another car and the other driver sustains injuries, your liability-only coverage will pay for the medical expenses incurred by the other driver. * Note that while there is no limit on the coverage for third-party bodily injuries, there is a limit on the amount of money the insurer may provide in case of third-party property damage.

Features of Liability-Only Cover in Motor Insurance

Third-Party Coverage: Provides financial protection against legal liabilities arising from injury or death of a third party. Property Damage Compensation: Covers damage caused to a third party's property, up to the specified policy limit. Mandatory by Law: As per the Motor Vehicles Act, having liability-only insurance is compulsory for all vehicle owners in India. Affordable Premiums: The policy is cost-effective since it offers limited coverage focused on third-party liabilities. No Coverage for Own Damage: It does not include protection for the insured vehicle or driver in case of accidents. Legal Assistance: Provides support in legal proceedings related to third-party claims arising from accidents.

Exclusions of a Liability only Cover

While third-party car insurance provides important protection, it does not cover everything. Here are a few things that liability-only coverage does not cover:

1. Damage to your own vehicle

If you are at fault in an accident, liability-only coverage will not pay for the damage to your own vehicle. You will need to purchase additional coverage, such as collision coverage or comprehensive coverage, to protect your own vehicle. Injuries you sustain in an accident: Liability-only coverage does not provide any protection for injuries you sustain in an accident. However, the personal accident cover, which is also mandatory for motor vehicle owners in India, can take care of major accidental injuries.

2. Theft or vandalism

Liability-only coverage does not provide any protection for theft or vandalism of your vehicle. You will need to purchase additional coverage, such as comprehensive coverage, to protect against these risks.

3. Damage due to natural or manmade disasters

If your car suffers damage due to any manmade or natural disaster, the expenses for your car’s repair won’t be covered under liability-only coverage. A comprehensive car insurance policy may be the right choice if you are seeking coverage for such events.

Inclusions of a Liability only Cover

1. Third-Party Injury or Death

Covers legal liabilities arising from accidental injuries or fatalities involving third parties.

2. Property Damage

Provides compensation for damages caused to a third party's property, with limits specified under the policy.

3. Personal Accident Cover for Owner-Driver

Includes mandatory personal accident coverage for the vehicle's owner-driver in case of death or disability.

4. Legal Liability to Paid Drivers

Covers liabilities for injuries or damages caused by a hired driver operating the insured vehicle.

5. Legal Costs

Offers coverage for legal expenses associated with third-party claims resulting from an accident. Also Read: Car Insurance Coverage Options Beyond Liability

Why is Liability-Only Coverage Important?

Liability-only coverage is important for several reasons, such as:

1. It is a legal requirement in India. If you are caught driving without insurance, you can be fined or even have your license suspended. Liability-only coverage provides the minimum coverage required by law, ensuring that you are legally compliant.
2. Liability-only coverage provides financial protection in case you cause damage to someone else's property or injure them in an accident. Without liability insurance, you would be personally responsible for paying for any damages or injuries you cause, which can be extremely expensive.
3. Liability-only coverage can be an affordable vehicle insurance option for drivers on a budget. While additional coverage is important for protecting your own vehicle and injuries, liability-only coverage provides the minimum level of protection required by law at a lower cost.

Should You Buy Comprehensive Coverage?

When wondering whether to opt for comprehensive coverage, it's important to consider your budget and the level of protection you need. If you have a new or expensive vehicle, comprehensive coverage may be a better option to protect your investment. However, if you have an older vehicle, liability-only coverage may be a more cost-effective option. * While comprehensive insurance coverage provides more comprehensive protection, it is also more expensive than liability-only coverage. The cost of comprehensive coverage depends on a variety of factors, including the make and model of your vehicle, your driving history, and the coverage limits you choose. Also Read: How Do Age And Gender Affect Car Insurance Rates? Liability-only coverage is the minimum coverage required by law in India, and it provides important protection in case you cause damage to someone else's property or injure them in an accident. Hence, as a responsible driver, you must have liability-only vehicle insurance and comply with the law as well as protect your finances. * Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.