In this blog, we’ll go through third party car insurance in detail so that we can gain a better knowledge of this important sort of coverage.
Purchasing car insurance is associated with purchasing a vehicle. Your car is one of your most valuable assets, one that you carefully selected and eagerly drove home from the showroom. While you may like the thrill of driving, it is equally critical that you insure your vehicle.
Also read: What factors influence car insurance rates?
Car insurance plans are divided into two categories by insurance firms. You have the option of purchasing either a comprehensive or third-party car insurance policy. The former is optional, but the latter is required by law.
What Is Third Party Car Insurance?
The most basic car insurance plan on the market is third-party liability. A third-party refers to a party to an car insurance contract who is not one of the two parties (vehicle owner and insurance company).
Third-party car insurance’s main goal is to compensate the insured for any loss or damage incurred to a third party as a result of an accident. It compensates the third-party for any bodily injury, death, or damage to their vehicle or property caused by the insured policyholder’s vehicle.
In this case, it is the policyholder’s responsibility or liability to compensate the third-party for the loss or damage caused by his or her vehicle. The insurance company is responsible for paying this compensation.
Benefits of Third-Party Car Insurance:
Ensures that a legal obligation is met
It satisfies a statutory legal responsibility because it is illegal to drive on Indian roadways without third-party car insurance. Anyone who owns and drives a car must have at least third-party auto insurance, according to the Motor Vehicles Act of 1988.
Protection Against Third-Party Liability on a Financial Level
You will be protected from financial loss due to third-party obligations arising from an accident if you have third-party automobile insurance. This is because the compensation sum will be paid on your behalf by your auto insurance carrier to the impacted third-party.
In the event that a third-party causes you bodily harm or death, you will be protected from financial liability. It will also cover up to Rs.7.5 lakhs in compensation for damage to a third-car party’s or property.
Also read: Why car insurance is important?
Personal Accident Insurance coverage
If you, the insured, have personally suffered injuries in a car accident that has resulted in permanent total disability, rendering you unable to earn a living, you are entitled to compensation under your third-party car insurance.
Your insurance provider will compensate you for the loss under the Personal Accident cover of your third-party car insurance.
The same is true in the event of death. The insurance company will pay compensation to your nominee.
Cheapest Automobile Insurance
Apart from the fact that it is required, many car owners prefer third-party car insurance to comprehensive car insurance because the cost of a basic third-party car insurance plan is less than that of comprehensive car insurance.
The Insurance Regulatory and Development Authority of India sets the premium for third-party car insurance every year (IRDAI). The IRDAI specifies the base premium amount to be charged for a third-party liability insurance plan, which is followed by all car insurance companies, and the premium is charged to the insured accordingly for third party car insurance.
Third Party Car Insurance Limitations:
Own Damage Coverage Is Not Included
One significant disadvantage of third-party car insurance is that it does not provide financial protection for damages to your own vehicle.
As a result, if your car is damaged in an accident or as a result of a natural disaster such as floods or cyclones, or as a result of a man-made disaster such as riots and strikes, or even if your car is stolen, you will be unable to seek compensation from your insurer. You will be responsible for the entire cost of repairing and re-registering your vehicle.
Also read: What is High Risk Auto Insurance?
No Scope For Enhancing The Coverage
Another significant disadvantage of a basic third-party liability car insurance policy is that there is no way to increase the coverage. This means that, unlike comprehensive car insurance, you cannot purchase additional add-on covers.
Insurers provide add-ons such as roadside assistance, no claim bonus, engine protection, and zero depreciation coverage to meet the specific needs of the car owner-driver.
They provide you with more comprehensive car insurance coverage and can even save you money in the long run.
Third party car insurance clearly provides you with some necessary financial protection. However, its scope of coverage is limited.
When purchasing car insurance, keep in mind that you have the option to upgrade your third-party car insurance to comprehensive car insurance coverage at the end of the policy year.
Also read: 7 Things to know before buying car insurance