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Any bike, car or auto that runs on an Indian road must have at least third party insurance. Section 146 of the Motor Vehicles Act, 1988 makes it compulsory. If your vehicle kills or injures someone, or damages someone else’s property, this policy pays the compensation you owe them. It does not pay for damage to your own vehicle; that needs a separate “own damage” cover. Driving without it can mean a fine and even jail. The premium is fixed by the Central Government, and the current rates are below.
Who is the “third party”?
You, the vehicle owner, are the first party. The insurance company is the second party. Everyone else who can be hurt by your vehicle — a pedestrian, people in another vehicle, the owner of a shop wall or a parked car — is the third party. The policy moves your legal duty to compensate them onto the insurer.
| Covered by third party insurance | Not covered |
|---|---|
| Death of, or injury to, another person caused by your vehicle (MV Act section 147(1)(b)(i)) | Damage to, theft of or fire in your own vehicle (needs own damage cover) |
| Damage to someone else’s property (vehicle, wall, shop), up to the limit written in your policy | Your own injury or death as owner-driver (that is the compulsory personal accident cover, see below) |
| Death of, or injury to, passengers of a transport vehicle such as an auto, taxi or bus (section 147(1)(b)(ii)); free riders in a goods vehicle are left out | Liability you take on under a private contract |
Why is it compulsory, and what happens without it?
- The law: nobody may use a vehicle in a public place, or let someone else use it, unless a policy covering third party risks is in force for it (MoRTH via PIB, 11 June 2024, on section 146). Only some government vehicles used for government work are exempt.
- Penalty under section 196: first offence — up to 3 months in jail, or a ₹2,000 fine, or both. Any later offence — up to 3 months in jail, or a ₹4,000 fine, or both. It applies to the driver and also to the owner who lets an uninsured vehicle be driven (PIB, 11 June 2024).
- The fine is the small part. If an uninsured vehicle causes an accident, the compensation the tribunal orders has to come from the owner. In death or serious injury cases this can run into lakhs. When a policy is in force, the insurer must pay the liability the policy covers (section 147(6)).
Who fixes the premium, and how much is it?
Insurers do not set this price on their own. For the death and grievous hurt cover, the Central Government fixes the base premium in consultation with IRDAI (amended section 147(2), in force from 1 April 2022). The rates now in use come from the Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022 (G.S.R. 394(E), 25 May 2022, effective 1 June 2022). They are base rates for unlimited liability cover; GST is added on top.
| Vehicle (petrol / diesel) | One year | New vehicle, whole term paid at once |
|---|---|---|
| Two-wheeler up to 75 cc | ₹538 | ₹2,901 (5 years) |
| Two-wheeler 75–150 cc | ₹714 | ₹3,851 (5 years) |
| Two-wheeler 150–350 cc | ₹1,366 | ₹7,365 (5 years) |
| Two-wheeler above 350 cc | ₹2,804 | ₹15,117 (5 years) |
| Car up to 1000 cc | ₹2,094 | ₹6,521 (3 years) |
| Car 1000–1500 cc | ₹3,416 | ₹10,640 (3 years) |
| Car above 1500 cc | ₹7,897 | ₹24,596 (3 years) |
| Passenger auto (up to 6 passengers, not e-rickshaw) | ₹2,539 + ₹1,214 per licensed passenger | — |
- Electric vehicles have their own, lower rates based on kW: for example ₹457 a year for an electric scooter up to 3 kW and ₹1,780 for an electric car up to 30 kW (Rules 2022, Table V). Hybrid vehicles get 7.5% off.
- When we checked IRDAI’s rules page on 27 October 2026, these were still the latest motor third party rules listed. If new rates are notified, we will update this table.
- For 2023-24 the Centre published a draft (G.S.R. 441(E), 14 June 2023) that proposed about 6.5% lower base premium for passenger three-wheelers (PIB, 20 June 2023). We found no official record that this draft became final rules, so for an auto in particular, confirm the figure in the insurer’s premium computation.
New vehicles: 3 or 5 years — and after that?
Following Supreme Court directions, from 1 September 2018 a new car comes with third party cover for 3 years and a new two-wheeler for 5 years, paid at the time of purchase (IRDAI circular, 21 June 2019, paras 1–2; rates in the third column above). When that term ends, the requirement does not: section 146 applies as long as the vehicle is used on the road. From then on the cover is usually renewed every year. The end date is printed on your policy.
Third party, own damage and package policies: how they differ
| Policy | What it pays for | Required by law? |
|---|---|---|
| Third party (liability only) | Death, injury or property damage caused to others | Yes (section 146) |
| Stand-alone own damage (OD) | Damage to your own vehicle from accident, fire, theft and similar events, as per policy terms | No, your choice |
| Package / comprehensive | Third party and own damage in one policy | Only the third party part |
- OD on its own: since 1 September 2019, insurers must offer one-year stand-alone OD cover for cars and two-wheelers. It is issued only if a third party policy already exists or is bought at the same time, and the OD policy must show the third party insurer’s name, policy number and dates (IRDAI circular, 21 June 2019, paras 3(a), 3(c)). So your third party and OD covers can be with two different insurers.
- IDV: the Insured’s Declared Value is the most the OD cover will pay for your vehicle. It is fixed at the start of each policy period, and the insurer must publish how it works it out and show the basis in the Customer Information Sheet (IRDAI PPHI Master Circular, 5 September 2024, page 130).
- The same circular also says: the premium for each add-on must be shown separately; no depreciation may be cut on non-OEM parts used in repairs (depreciation on other parts follows your policy terms); and in a partial loss, collecting the damaged parts (salvage) is the insurer’s job, not yours.
Personal accident cover for the owner-driver (CPA)
Third party cover protects other people. For the owner who drives, there is Compulsory Personal Accident (CPA) cover against death and permanent disability. IRDAI’s rules (circular of 11 December 2018):
- From 1 January 2019, CPA can be taken inside the liability-only or package policy, or as a separate policy. If you take it separately, the CPA part is removed from the vehicle policy.
- A stand-alone CPA lasts one year and covers you while driving any vehicle you own.
- It covers death and permanent disability (total and partial).
- If you already have a 24-hour personal accident policy for death and permanent disability with a sum insured of at least ₹15 lakh, the circular says a separate CPA is not needed.
After an accident: how victims get compensation
- Where the claim goes: victims, or the legal heirs of someone who died, apply to the Motor Accident Claims Tribunal (MACT). Once the insurer learns of the accident, it must name an officer to handle the claim, who may make a settlement offer within 30 days. If the claimant accepts, the insurer must pay within 30 days of receiving the tribunal’s record of settlement; if not, the tribunal hears the case (section 149).
- No-fault compensation: ₹5 lakh for death and ₹2.5 lakh for grievous hurt, without having to prove whose fault it was (section 164).
- Hit and run (vehicle not traced): the Act provides ₹2 lakh for death and ₹50,000 for grievous hurt, or a higher amount if the Central Government prescribes one, paid through a government scheme (section 161).
- As the owner: tell your insurer about the accident quickly, and keep the policy, RC, driving licence and police report (FIR) copies ready. Which papers are needed and within what time is set out in your policy terms.
Three more rules worth knowing
- The insurer cannot cancel it midway: a statutory third party policy cannot be cancelled by the insurer except for double insurance or total loss of the vehicle (PPHI Master Circular, page 133).
- Selling or buying a used vehicle: the insurance passes to the new owner from the date of transfer. The new owner must apply to the insurer within 14 days to get the policy changed to their name (section 157). For the own damage part of a package policy, check what the insurer’s terms ask for (papers, fee, NCB) and do not delay.
- Doing it online: many insurers let you buy and renew on their official website or app. An e-policy must be digitally signed, and you can ask for a paper copy (PPHI Master Circular). What is available online depends on the insurer. Stay safe: type the insurer’s web address yourself and do not tap “cheap third party” links that arrive by SMS, WhatsApp or email — fake policies are sold this way.
Worked example (imaginary)
Srinivas in Warangal owns a 110 cc scooter with a third party policy only (base premium ₹714 a year plus GST). One evening his brakes fail near a junction and he hits a parked car.
| Loss | Who pays |
|---|---|
| Car owner’s repair bill, ₹40,000 | Srinivas’s third party policy, within its property damage limit and terms |
| Repairs to Srinivas’s scooter, ₹8,000 | Srinivas himself (an OD or package policy, if he had one, would apply as per its terms) |
| Srinivas’s fractured wrist, hospital bill | Not third party. CPA covers only death and permanent disability; the hospital bill depends on his health insurance, if any |
| If his policy had expired the day before | He pays the car owner himself and may also face a section 196 penalty |
Key terms
| Term | Plain meaning |
|---|---|
| Third party (TP) / liability only | Cover for harm your vehicle causes to others; compulsory |
| Own damage (OD) | Cover for damage to your own vehicle; optional |
| Package / comprehensive | TP and OD together in one policy |
| IDV | The maximum value the OD cover pays for your vehicle |
| CPA | Death and permanent disability cover for the owner-driver |
| MACT | Motor Accident Claims Tribunal, which decides compensation for accident victims |
| Base premium | The TP rate fixed by the Central Government, before GST |
Common beliefs and the facts
| Belief | Fact |
|---|---|
| “My bike is old, it doesn’t need insurance.” | Age does not matter; any vehicle used on the road needs third party cover. |
| “We paid for 5 years at purchase, so we’re done.” | After those 5 years (3 for a car), it must be renewed. |
| “Third party cover will fix my bike too.” | No. Your own vehicle needs OD cover. |
| “I only ride on village roads.” | The law applies to use in any public place, including any road. |
| “The fine is only ₹2,000, less than the premium for some vehicles.” | The fine is not the real risk; after an accident the victim’s compensation can fall on the owner. |
What to check
- When does your third party cover end? If it came with a new vehicle for 3 or 5 years, when does that term run out?
- Are the registration number, engine and chassis numbers and owner’s name correct on the policy?
- Do you have third party only, or a package policy? If OD is separate, when does it end?
- What is the limit for damage to other people’s property in your policy?
- Is CPA included, or do you hold a separate 24-hour PA policy of at least ₹15 lakh?
- If you have package or OD cover: what is the IDV, how was it worked out, and what does each add-on cost? Is it all in the CIS?
- Bought or sold a vehicle? Has the name change been applied for within 14 days?
- Was the policy bought or renewed through the insurer’s official website, app or a licensed agent?
Sources
- PIB / Ministry of Road Transport and Highways, 11 June 2024: section 146 (compulsory third party cover), section 196 (₹2,000 / ₹4,000, up to 3 months’ jail)
- Motor Vehicles (Amendment) Act, 2019 (No. 32 of 2019, Gazette): new Chapter XI — sections 147 (cover, base premium), 149 (30-day settlement offer), 157 (transfer, 14 days), 161 (hit and run), 164 (₹5 lakh / ₹2.5 lakh)
- Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022 (G.S.R. 394(E), 25 May 2022, from 1 June 2022): Tables I, II (auto), IV (3- and 5-year rates), V (electric), Note III (hybrid 7.5%)
- PIB / MoRTH, 20 June 2023: draft rules for 2023-24, G.S.R. 441(E), 14 June 2023 (about 6.5% cut proposed for passenger three-wheelers); no final notification found
- MoRTH draft notification (on IRDAI’s site): amended section 147 in force from 1 April 2022 through S.O. 859(E), 25 February 2022
- IRDAI circular IRDAI/NL/CIR/MOTOD/095/06/2019, 21 June 2019: long-term TP from 1 September 2018 (Supreme Court directions), stand-alone OD from 1 September 2019, OD only with TP in force
- IRDAI circular IRDAI/NL/CIR/MOTP/200/12/2018, 11 December 2018: stand-alone CPA from 1 January 2019, one year, all owned vehicles, not needed with ₹15 lakh PA cover
- IRDAI Master Circular on Protection of Policyholders’ Interests, 5 September 2024: page 130 (IDV, add-ons, non-OEM depreciation, salvage), page 133 (TP policy cannot be cancelled)
All sources above were checked on 27 October 2026. Last updated: 27 October 2026.