Liability car insurance coverage and how it works


04 Aug 2023

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Planning to buy a car? Well, before you can take your dream car out for a spin, you must secure it with a car insurance policy. Driving without a policy will not only lead you to a hefty penalty but is deemed illegal as per the Motor Vehicles Act. To avoid any such consequences, you must purchase a liability car insurance policy at the minimum.

A liability-only car insurance policy offers you legal and financial assistance in the event of an accident that involves other individuals, vehicles or properties. It is also the only insurance you will ever need to drive your car legally on the road. Before you buy the policy, here is all that you must know about it and how it works.

What is liability insurance?

This is barebones insurance for your car which meets the statutory requirements as well. The policy offers protection to the insured against any injuries to individuals, damages to personal property and damages to other vehicles as well. However, the policy does not provide any cover to the insured.

There is a possibility of a legal issue arising out of accidents. In such cases, the liability-only policy offers financial assistance. Ensuring that you do not end up paying for legal expenses.

How does it work?

In a liability on policy, the insured is known as the first party while the insurance provider is known as the second party. In the event of an accident, the other entity is the third party. And should the insured be involved in an accident; the insurance provider will cover the charges for repairs on the vehicle or property of the third party.

In case of an injury, the insurer will cover the medical expenses of the third party as well. And in severe cases, where the third party loses his/her life, the policy will compensate for that as well. This keeps the insured away from any sort of financial burden due to accidents.

The first thing that you must do after an accident is to inform your insurance provider about the same. And once you file a claim, the insurance provider will send a surveyor to assess the extent of damages and the estimate for repairs. On the completion of verification, the insurance company will settle the bills.

A liability-only car insurance policy offers you complete peace of mind from any financial and legal risks that can occur during an accident. Though it does not provide any cover for the insured, financial assistance for third-party accidents is a significant coverage.

Also, the premiums of a liability-only policy are the lowest. Car owners who do not drive their cars a lot can buy liability-only car insurance online.


Apart from being the statutory requirement, a liability-only policy offers complete peace of mind when it comes to legal or financial assistance in the case of an accident. Due to its limited coverage, the policy is the most affordable one as well. And you can buy liability car insurance online within a few minutes.

Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.