SYNOPSIS

Subject: INSURANCE LAW

Topic: Third Party Insurance under Motor Vehicles Act, 1988

Introduction:

Insurance is a contract where by one party, the insurer, undertakes in return for a
consideration, the premium, to pay the other, the insured or assured, a sum of money in the event
of the happening of a, or one of various, specified uncertain events.

In India, under the provision of the Motor Vehicles Act, 1988, it is mandatory that every
vehicle should have a valid insurance to drive on the road. Any vehicle used for social, domestic
and pleasure purpose and for the insurers business motor purpose should be insured.

A third party insurance policy is a policy under which the insurance company agrees to
indemnify the insured person, if he is sued or held legally liable for injuries or damage done to a
third party. The insured is one party, the insurance company is the second party, and the person
you (the insured) injure who claims damages against you is the third party.

Motor third party insurance or third party liability cover, which is sometimes also referred
to as the act only cover, is a statutory requirement under the motor vehicle act. It is referred to as
a third party cover since the beneficiary of the policy is someone other than the two parties
involved in the contract i.e., the insured and the insurance company. The policy does not provide
any benefit to the insured; however it covers the insureds legal liability for death/disability of third
party loss or damage to third party property.

Importance of Study:

A recent study that more than half the registered vehicles in the country are not insured,
either they havent ever had an insurance cover or it was not renewed after the first year. This is
despite the fact that third party liability insurance is mandatory for vehicles in India. The Motor
Vehicles Act, 1988 u/s 146 mandates that every vehicle should be compulsorily insured for third
party risk. The reason is because of the growing number of accidents that causes fatalities and
disability among the victims. So it is very important to know the different aspects of the third party
insurance under this Act.

Objectives of Study:

This paper is an endeavor to explain the relevance of third party insurance?

What is third party insurance?
Who is a third party?
Why third party insurance is for all vehicles under the Motor Vehicles Act, 1988?
 What are the salient features of third party insurance?
The aspects of the third party insurance have been explained with the help of various case
laws.

Sources of Study: The study confines literary sources, especially Law of Insurance, Avtar Singh,
Eastern Book Company, Lucknow, 2nd Edition, Articles and other internet sources.

Method of Study: The study is purely doctrinal research and confined to legal doctrines and statute
of limitation with procedural laws.

Conclusion:

The third party liability insurance under the motor vehicles Act, 1988. Third party
insurance protects the interest of a third party who becomes the victim of accident or injury caused
by the fault of the insured. So any liability arising on the insured by the third party is mitigated by
the insurance company. Third party insurance is compulsory under the motor vehicles Act, 1988.
As the third party insurance is mandatory so it cannot be overridden be any clause in the insurance
policy.

Devendra Babu

1232713111
BBA LLB (Hons)
8th semester