Damaged your car? Why third-party insurance claims might not help

Third-party insurance is compulsory for vehicle-owners. But not many seem to remember to claim it when their vehicle is hit by another. Even if they do, they probably drop the idea after learning about the complications involved.

If you drive in a city like Delhi, there is little chance that you will escape an accident, even if only a minor one. The bills for these damages, both small and big, will in all probability be paid by you, though the accident may not have been your fault. Even if your insurer pays, this will mean losing the 'no-claim bonus' .

So, how about filing the claim as the 'third party'? Third-party insurance is compulsory for vehicle-owners and can be used in such cases. But not many seem to remember to claim it when their vehicle is hit by another. Even if they do, they probably drop the idea after learning about the complications involved.

The extensive procedure starts with filing an FIR with the police and obtaining a charge sheet. After this, a case has to be filed in a special court, the Motor Accident Claims Tribunal. Civil courts cannot decide road accident compensation claims. "The case should be filed in the tribunal with jurisdiction over the area where the accident occurred," says Amitabh Jain, head of customer service, motor, ICICI Lombard.

The complaint can also be registered with the tribunal with jurisdiction over the area where the claimant or the defendant resides. A claim can be filed for injury, death and property damage. While there is no limit on liability for injury or death, the cover for third-party property damage is up to Rs 7.5 lakh.

ADVISORY: How to best claim your insurance money

Remember here that you are on your own. Your insurer will not help you file a claim against another insurer. Motor insurers have a 'knock-to-knock agreement' in which they agree to bear responsibility for damages to vehicles insured with them so long as it is covered for such damage, regardless of the liability.

"The damage to the vehicle and medical expenses is to be settled by the insurer who has covered it and no claim will be recoverable from the insurer of the vehicle responsible," says Mukesh Kumar, head, strategic planning and marketing, HDFC ERGO General Insurance.

If you are still keen on moving the tribunal, make sure you have all the documents in place. "Ensure that proper narration of the incident is recorded in the FIR and original records of expenses are kept to substantiate the pecuniary losses," says Ajay Bimbhet, MD, Royal Sundaram Alliance Insurance.

In case of injury, one can claim medical expenses, compensation for physical disfigurement and loss of earnings (if a person is not able to work after the accident). In case of death, the dependents can claim compensation on the basis of the income of the deceased. Medical expenses can also be claimed for treatment of the injury that was the cause of death. For property damage, surveyor's report, original bills and motor vehicle inspection report are required to quantify the loss.

"On an average, in third-party claims involving bodily injury or death, the turnaround time is one to two years," says Vijay Kumar, president, motor insurance, Bajaj Allianz General Insurance.

However, the trickiest part is establishing the other party's fault in court. The victim has to establish negligence for compensation. Only after this can damages be claimed from the wrongdoer and his insurance company. So, you cannot be sure of getting any money until the court decides in your favour.

And if you happen to get less than what you had filed for, do not expect your insurer to pay the difference. Compensation for the same damage cannot be claimed more than once. Also, due to the number of pending cases, the court may give you a date, say, six months forward. Therefore, there is a chance of getting stuck for a long time.

ADVISORY: How to avoid rejection of insurance claim

"Even though it is legally possible, we have so far no experience of anybody claiming third-party compensation. The process is cumbersome and time-consuming," says Kumar. According to insurance regulators data for 2010-11, total 'own damages' claims paid by the industry for private cars and two-wheelers was Rs 3,459 crore, while third-party claims were only Rs 1,300 crore.

"No customer is willing to take so much trouble for a small crash that can be swiftly settled with an own-damages claim," says Kumar.

Those who do not have a comprehensive motor cover and are solely depend on third-party compensation, do not forget to jot down the offending vehicle's registration number. This is the only way to track down the vehicle and lodge a complaint.