Ramesh, 25, has just bought his first used car at an attractive price. His car already had third-party insurance from the previous owner. Wanting to keep his costs low, Ramesh decides not to buy any additional cover for his car. A few months later, Ramesh gets involved in a road accident. Another person is injured, while Ramesh's car is also damaged. His passengers also need medical attention. Ramesh assumes his insurance will take care of everything. But this is where three common misconceptions about third-party insurance can cost a car owner money. What is Third-Party Insurance? Third-party insurance protects the vehicle owner against covered legal liability arising from injury, death, or property damage caused to a third party by the insured vehicle. Think of a situation where you break your neighbour's window. It makes you liable for the damage caused to another person, the third party. Your insurer will protect you against the covered liability for the loss of the window that you caused. Misconception 1: "Third-Party Insurance Covers My Car Damage and My Passengers" Against popular assumptions, third-party insurance does not cover damages caused to the policyholder’s own car, injuries caused to themselves due to the accident, or injuries caused to any passengers present in the insured vehicle. For the accident caused by Ramesh, only the bodily injury to the third party or any vehicle damage caused to their vehicle is covered by this third-party insurance. These added liabilities arising from the road accident can be covered only through other forms of insurance. Damages to Ramesh’s insured car can be covered by the Own-Damage cover provided in car insurance policies. An Owner-driver Personal Accident cover can cover injuries to Ramesh. Injuries to the passengers can be covered by their individual Personal Accident covers or a Group Personal Accident cover. So now, with only third-party insurance, Ramesh would have to spend ₹75,000 as the repair bill of his own car, and ₹25,000 for treating his own injuries from the accident. The injured passengers may present Ramesh, the legally liable party, with a motor accident compensation claim before the Motor Accidents Claims Tribunal (MACT), as per Section 166 of the Motor Vehicles Act, 1988. Misconception 2: "Third-party Insurance Will Pay the Person Owed Fully"