If you own a car in India, third-party car insurance is required by law. This type of insurance policy protects you financially if your vehicle causes damage or injury to another person, vehicle, or property.
Let’s break down what it means, how much it costs, and how you can find the cheapest third-party car insurance in India.
Third-party car insurance is a type of motor insurance that covers damages or losses caused by your vehicle to another person, vehicle, or property. It does not cover damage to your own car.
This insurance is mandatory under Section 146 of the Motor Vehicles Act, 1988, meaning every car owner in India must have at least a third-party policy to drive legally on Indian roads.
The main purpose of this policy is to protect victims of road accidents. If your car causes injury or damage, your insurance company compensates the victim, so you do not have to pay from your own pocket.
According to the Insurance Regulatory and Development Authority of India (IRDAI), this ensures social responsibility and financial protection for all road users.
Third-party car insurance includes the following benefits:
Injury or death of a third party: Compensation for medical expenses, disability, or death.
Damage to third-party property: Covers property or vehicle damage caused by your car.
Legal liability: Protects you from legal costs arising from third-party claims.
Third-party policies do not cover:
Damage to your own car due to accidents or theft.
Personal accident or injury to the owner-driver (unless an add-on is purchased).
Mechanical breakdown or wear and tear.
Driving without a valid licence or under the influence of alcohol.
If you want coverage for your own vehicle as well, you can opt for a comprehensive car insurance policy instead.
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Unlike comprehensive insurance, third-party premiums are standardised by IRDAI, not set by insurance companies. The price mainly depends on the engine capacity (cc) of your car or the battery power (kW) in the case of electric vehicles.
The current premium rates (as per IRDAI 2025 guidelines) are:
|
Vehicle Type |
Engine Capacity / Battery Power |
1-Year Premium |
3-Year Premium (for new cars) |
|---|---|---|---|
|
Private Car |
Up to 1000 cc |
₹2,094 |
₹6,521 |
|
Private Car |
1000 cc – 1500 cc |
₹3,416 |
₹10,640 |
|
Private Car |
Above 1500 cc |
₹7,897 |
₹24,596 |
|
Electric Car |
Up to 30 kW |
₹1,780 |
₹5,543 |
|
Electric Car |
30–65 kW |
₹2,904 |
₹8,729 |
|
Electric Car |
Above 65 kW |
₹6,712 |
₹20,907 |
These prices are fixed and apply across all insurers, so the base third-party price is the same everywhere.
Although the base price is fixed by IRDAI, there are still a few ways to reduce your total premium:
Different insurers may offer discounts or bundle offers on add-ons like personal accident cover or roadside assistance. Use reliable online aggregators like Moneyview Vehicle Insurance to compare quotes.
For new cars, a 3-year policy is mandatory. Paying upfront for multiple years can save you from annual rate hikes announced by IRDAI or the government.
Renewing on time prevents lapse penalties and the need for vehicle inspection, which can increase your cost later.
A record with no accident claims or traffic violations can make you eligible for No Claim Bonus (NCB) if you upgrade to a comprehensive plan later.
Let’s say you drive a petrol hatchback with a 1200 cc engine.
Your 1-year third-party premium will be around ₹3,416.
For a 3-year policy, the total cost would be ₹10,640 (as per IRDAI rates).
If you add optional personal accident cover for the owner-driver, your final premium would be slightly higher.
Driving without valid third-party insurance is a legal offence. According to the Motor Vehicles (Amendment) Act, 2019, you may face:
A fine of ₹2,000 for the first offence.
A fine of ₹4,000 or imprisonment for repeat offences.
The table below compares third-party car insurance to comprehensive car insurance:
|
Feature |
Third-Party Insurance |
Comprehensive Insurance |
|---|---|---|
|
Covers own vehicle |
No |
Yes |
|
Covers third-party damages |
Yes |
Yes |
|
Add-ons (like zero depreciation) |
No |
Yes |
|
Premium cost |
Lower |
Higher |
|
Best for |
Mandatory compliance |
Complete protection |
If you want only the legally required minimum, third-party insurance is sufficient. But for full protection against accidents, theft, or natural disasters, comprehensive insurance is recommended.
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Third-party car insurance is the minimum protection every car owner must have in India. It safeguards you from the financial and legal consequences of accidents while fulfilling your legal duty.
To get the cheapest third-party car insurance, always compare quotes, choose multi-year coverage, and renew on time. By keeping your insurance active, you follow the law and drive with peace of mind.
Legally, yes. But it will not protect your car from damage or theft.
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Disclaimer
The starting interest rate depends on factors such as credit history, financial obligations, specific lender's criteria and Terms and conditions. Moneyview is a digital lending platform; all loans are evaluated and disbursed by our lending partners, who are registered as Non-Banking Financial Companies or Banks with the Reserve Bank of India.
This article is for informational purposes only and does not constitute financial or legal advice. Always consult with your financial advisor for specific guidance.
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