If you own a motor vehicle, you must be aware that it is compulsory to have third-party (TP) insurance—Section 146 of the Motor Vehicles Act, 1988, mandates the TP cover.
It is also known as ‘act only’ or ‘liability only’ cover. If one is found driving a vehicle without this mandatory insurance cover, the person will attract a penalty of Rs 2,000 and/or imprisonment of up to three months. If a person is found driving a vehicle without such insurance a second time, s/he will be liable for a fine of Rs 4,000 and/or imprisonment of up to three months.
How does TP insurance cover help the insured?
First, you must understand a few terms used in the TP insurance contract. The first party refers to the policyholder, the person who has bought the insurance cover, while the second party is the insurance company from which the policy has been purchased. Finally, the third party refers to the risk covered under insurance policy as per the provisions of MV Act against third-party liability.