Over 50% of vehicles lack third-party insurance; is yours among them? Know legal consequences, cost of coverage, and savings

A lot of vehicle owners believe they drive responsibly and follow every rule, but accidents can happen out of the blue, and it’s not always your fault. Just one unexpected accident could lead to legal issues and compensation claims running into lakhs, even if you weren’t at fault. The reason? You might not have third-party motor insurance, a cover which typically costs less than ₹ 3,500 a year for vehicles with engines up to 1500 cc.Every year from 11–17 January, we observe Road Safety Week, which serves as a reminder that road safety isn’t just about how we drive; it’s also about being prepared for unexpected situations. Third Party Motor Insurance is mandatory under the provisions of the Motor Vehicles Act, 1988, and plays a vital role in providing financial protection to accident victims.Keep reading to find out why third-party insurance is compulsory, the penalties for not having it, the costs for two-wheelers and four-wheelers, available discounts, and more.

Why is third-party insurance mandatory?

Despite being a legal requirement, awareness and compliance remain low. According to the IRDAI letter dated January 9, 2026, over 50% of vehicle owners in India lack third-party motor insurance, largely due to a lack of awareness.With India witnessing a high number of road accidents every year, third-party insurance acts as a basic safety net, ensuring innocent victims are compensated and legal liabilities are met. By making this insurance compulsory, the government aims to protect accident victims financially, promote responsible driving, and ensure accountability among vehicle owners.“Since accidents can involve innocent road users, the law prioritises public welfare, making third-party insurance compulsory for all vehicles operating on public roads, “ says Paras Pasricha, Head of motor insurance, Policybazaar.

What’s covered in third-party motor insurance and what’s not?

Third-party motor insurance is designed to protect others from the financial consequences of your actions on the road. In simple terms, it covers injuries or death of another person caused by your vehicle, as well as damage to someone else’s property, such as another car, motorcycle, or roadside structure.It is important to note that TPI does not cover damage to your vehicle or your medical expenses.

“Third-party insurance covers the financial and legal responsibility arising from injury, death or property damage caused to a third party due to the insured vehicle. It covers legal liabilities and court-awarded compensation. However, what it does not cover is your own car or bike; any damage to your vehicle, theft or personal repair costs are completely excluded. Many policyholders only realise these exclusions when they file a claim, “ says Krunal Vora – Senior Vice President & Product Head – Motor Insurance, Probus.

What are the legal consequences of not having third-party motor insurance?

Driving without valid third-party insurance can result in a host of legal consequences. Explaining this, Pasricha outlines the fines and legal implications vehicle owners may face for not having third-party insurance

● Fines starting from ₹ 2,000, which increase for repeat offences

● Possible imprisonment

● Suspension or cancellation of driving licence

● Legal complications and out-of-pocket payouts in case of an accident

● In serious accidents, courts may direct the vehicle owner to compensate victims directly, which can run into several lakhs or even crores. Without insurance, there is no legal or financial protection, making the owner fully liable for damages and legal costs.

How much does third-party insurance cost for a two-wheeler or a four-wheeler?

The base premiums for third-party motor insurance are fixed by regulation under the Motor Vehicles Act and are determined as per the Motor Third Party Insurance Rules.

Niharika Singh, ED Marketing, IFFCO-TOKIO General Insurance Company Limited, outlines the insurance cost for a two-wheeler or a four-wheeler.

Two-Wheeler Third Party Insurance (Annual Premium):

Four-Wheeler Third Party Insurance (Annual Premium):

She further explains that it’s important to note that these are minimum statutory costs for Third Party cover. If you want broader protection (e.g., Own Damage alongside TP), the total premium will be higher as it includes additional coverages beyond statutory requirements.

Discounts for long-term third-party insurance buyers

Since third-party insurance premiums are regulated and revised periodically, the scope for discounts is limited. However, these long-term covers provide regulatory compliance and cost stability over multiple years, often at a cumulative rate that is lower than renewing annual policies each year.

“Long-term third-party policies help lock in prices and avoid yearly renewal hassles, which many customers appreciate, “ says Vora

“While the upfront cost may appear higher, long-term third-party insurance offers peace of mind, regulatory compliance, and cost stability over time, “ says Pasricha.

Is buying only third-party motor insurance enough for vehicle owners?

While it may meet legal requirements, it is inadequate in practical terms, as third-party insurance only covers damages to others and does not protect the vehicle owner’s own car or bike.

“Vehicle owners remain exposed to repair costs after accidents, losses due to theft, floods, fires, etc. This is why it’s vital to have comprehensive motor insurance (OD cover), “ says Pasricha.

If you wish to get coverage for damages to your own vehicle, then you will have to go for a comprehensive car insurance policy. A comprehensive plan provides an added protection through add-on covers like Zero Depreciation Cover, Return to Invoice Cover, Breakdown Assistance, and more, with additional Own Damage premium.

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