Question 1

What is meant by 1st party, 2nd party, and 3rd party in insurance?

Accepted Answer

In motor insurance, the 1st party is the person who bought the insurance policy and has the responsibility to pay the premium amount on time. The 2nd party to insurance is the insurance company which is liable to indemnify the insured on the happening of a covered event. The 3rd party to insurance can be any person other than the parties mentioned above (1st and 2nd party to insurance).

Question 2

Why is it called 3rd party insurance?

Accepted Answer

The beneficiary of the policy is someone who is not involved in the insurance contract (the insurance company and the vehicle owner). They can be anyone other than the two parties in the contract. The benefits of the policy are given to the third party and not to the insured.

Question 3

Does 3rd party insurance cover my car?

Accepted Answer

The owner of any vehicle, who has registered it with the RTA in India can buy third-party insurance.