Markets & Finance

What Is Third Party Auto Insurance and What Are Its Limitations

Third party insurance is the most basic form of automobile insurance policies as mandated by the law to ensure 3rd parties in any accident are fully protected. In essence, it is a type of liability coverage bought by the insured (1st party), provided by the insurer (2nd party) for protection against claims made by another motorist (the 3rd party). The 1st party is therefore held fully responsible for his or her losses, regardless of who exactly was the guilty party in the accident.

This type of automobile insurance policy covers 2 forms of liabilities. These are bodily injury liability and property damage liability. The first coverage is meant to cover costs incurred by the 3rd party such as medical bills, lost wages and pain or suffering sustained as a result of an accident. The second coverage encompasses any property damage the 3rd party may have incurred as a direct result of an accident.

What are the Limitations of a 3rd Party Automobile Insurance?

As it was earlier noted, third party insurance is in fact a very basic automobile insurance policy. It thus offers only coverage for the injuries sustained by the 3rd party, injuries to any passengers in his or her car and any damage to their vehicle or property. This definitely means that the injuries or damages, which the 1st party will incur as a result of the accident, must be footed by them alone. This form of automobile insurance policy does not also offer any protection from theft or fire.

What are the Main Disadvantages of 3rd Party Automobile Insurance?

This type of automobile insurance cover, first of all, does not offer any protection against damage to your car in accidents where you are proved to be the guilty party. This naturally signifies you will be required to foot all the bills of repairing your vehicle all by yourself. Also, it is not always the cheapest automobile insurance policy you can settle for. This is primarily due to its popularity with inexperienced and young motorists. As such, you might, in some cases, find yourself paying premiums whose amount may not greatly differ from those you would pay for other automobile insurance policies. This of course includes the comprehensive policy, without in any way accessing the additional protection that such coverage offers.

Enter the Comprehensive Automobile Insurance Policy!

Totally unlike the third party insurance, the comprehensive automobile policy provides the highest possible level of protection when it comes to being involved in an automobile accident. With this option, besides the 3rd party, you yourself will be insured against any injuries or damages you sustain, even if the accident was your fault. The coverage offered includes injuries to the 3rd party, yourself or any other passengers in both cars at the time of the accident.

It also offers protection against all damages to the 3rd party’s vehicle and that of yours as well. Additionally, you will be fully covered against any malicious damage to your vehicle along with its theft or damage sustained through a fire accident. In view of these advantages, it will be very prudent of you to choose the comprehensive automobile insurance policy, even if it is relatively expensive than the 3rd party policy.