Third Party Only (TPO) covers a policyholder against damage to a third party's property or to the third party themselves.

In other words, Third Party liability coverage in Scotland cover you if you run into another car and cause damage to that car and injure the occupant(s) of that car. TPO does this by paying for the repair to that other vehicle, and any medical claims or injuries suffered by the occupant(s) of that other car and any passengers in your car other than you. A Third Party Only policy will not pay for the costs of repairing your own vehicle nor will it pay anything toward your medical expenses if you are injured.

In Scotland, as in the rest of the UK area, motor insurance is a legal requirement. If you cause an accident that results in loss of life or permanent injury to other people, the cost of the claim can be into millions of pounds so without insurance you and your assets are put at risk. You cannot drive a motor vehicle without a valid motor insurance policy, and there are stiff fines and penalties (including a jail sentence) if you are found to be driving without having motor insurance cover.

Driving without insurance against third party risk is an offence contrary to Section 143 of the Road Traffic Act 1988. The requirement is for the driver to be insured, rather than the vehicle. The driver may be insured to drive one or more specified vehicles only or to drive any vehicle with the consent of the owner.

The penalties available for the offence of driving without the required insurance can include a maximum fine of £5,000, the automatic endorsement of an offender's licence with 6-8 penalty points and possible disqualification. In 2003 driving uninsured became an offence for which, instead of prosecution, a fixed penalty could be offered. The level of the fixed penalty was set at £200 plus 6 penalty points.

As noted above driving without insurance in Scotland can be dealt with by a fixed penalty of £200, but the maximum penalties available to the courts are a £5,000 fine, discretionary disqualification and six to eight points on a driving licence.

The Central Scotland Police notes that due to legislation, The Serious Organised Crime and Police Act 2005 and the Road Traffic Act 1988 (Retention and Disposal of Seized Motor Vehicles) Regulation 2005, any person who drives a vehicle on a road without valid insurance or a valid driving licence faces having their vehicle seized and held by Police. Furthermore if the owners are not able to produce valid documents, along with a financial penalty, the vehicle can be disposed of.