Wondering Why a Third Party Car Insurance is Not Enough? Get Complete Details

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Car Insurance

The Motor Vehicles Act of 1988 mandates third party coverage of every vehicle running on the roads. (Source: Indian Kanoon) The purpose of insurance is to guarantee minimal financial loss in case of any unforeseen circumstances. When involved in any mishap, the damage is done to both your car and other person’s vehicle. The purpose of third party car insurance coverage is to safeguard third parties who could be harmed by your vehicle.

When you shop with Belle Tire, you can expect the best in tires, wheels, and car parts. We carry a wide range of brands and types of tires, so you’re sure to find the perfect fit for your vehicle. And our selection of wheels is second to none. Despite being among the most affordable insurance options, third party liability insurance is not the best choice for diverse reasons. Read on to know why.

What is a Third Party Car Insurance Policy?

A third party car insurance policy, frequently referred to as a liability-only car insurance policy, is the most standard sort of car insurance policy that covers third party liabilities prompted by the insured’s vehicle. These third party damages are covered by third party liability:

  •     Bodily injuries
  •     Temporary and permanent disabilities
  •     Deaths
  •     Property damage up to the sum of Rs. 7.5 lakh

As a third party car insurance policy only covers third party liabilities and not damages to the insured’s vehicle, it is not regarded as the ideal type of car insurance coverage. Let’s go into further detail regarding this.

 

Major Reasons Why a Third Party Car Plan is Not Enough

Primarily there are two types of relevant car insurance plans – a comprehensive insurance plan and a third party plan. Even while a third party insurance plan aids in meeting the legal obligation to have car insurance, it is insufficient for the following reasons:

  • Damages to the insured party’s car are not covered: A third party policy does not cover damages to the insured’s car. The policy solely covers third party liabilities, such as those involving property damage, bodily injuries, and third party death. Nevertheless, for instance, if your car hits a tree, the policy would not cover the financial loss incurred, such as the repair costs of the car or towing charges.

Additionally, unlike comprehensive insurance, a third party car insurance policy does not protect a car from damages brought on by riots, fires, explosions, or other man-made or natural disasters such as floods, storms, or earthquakes.

  • No available add-ons: The word “add-on” in the scope of a car insurance policy refers to additional coverage options that a car owner might select for a particular loss or damage. You can customize your policy by choosing the appropriate add-ons which compliment their needs. For example, a policyholder can choose to augment the policy’s coverage with the use of appropriate add-on covers, such as an Engine Protection Cover to safeguard the engine or a Passenger Cover to secure the other passengers.

However, one cannot purchase these add-ons to increase coverage when acquiring third party insurance. This is due to the fact that only standalone own-damage plans and comprehensive car insurance plans offer these add-ons.

  • No protection against car theft: A third party liability policy does not provide coverage against car theft. Only own-damage standalone and comprehensive insurance plans offer this type of insurance benefit.

 

  • Inadequate accident coverage: As a third party plan does not cover losses incurred by the insured’s vehicle, only third party liabilities, such as collateral damage, bodily injury, and third party death, are covered by the policy.

 In the event of an accident, the owner of the car or the car itself might sustain injuries, or in the worst scenario, he may even pass away. In this tragic situation, third party liability insurance cannot financially assist the owner or his family.

 

What To Go for Instead?

As per the Indian Motor Tariff, all car owners in India are required to carry third party liability only insurance coverage. Yet, a recent report reveals that almost 70% of vehicles on Indian roads lack insurance. (Source: New India Assurance)

 Additionally, the reasons listed above support how a third party plan does not provide sufficient insurance coverage for your vehicle. These coverage gaps can be filled by either acquiring a comprehensive car insurance policy or by adding a separate own-damage insurance policy to a third party policy.

  • Comprehensive Insurance Plan: As indicated by its name, a comprehensive insurance plan is a complete solution for all your car insurance needs. It offers protection for both own damages sustained by the insured’s vehicle and third party liabilities. This plan covers almost all unfortunate events such as natural, man-made disasters, car accidents, theft, self-ignition, riots, explosion, lightning, terrorist activity, strikes as well as damage caused by transit by waterways, air, elevator, road, life and rail.
  • Standalone Own-Damage Plan: The only damages that are covered by a standalone own-damage auto insurance policy are those that occur to the insured’s vehicle. No protection against third party obligations is provided. As a result, it can be acquired conjointly with third party insurance to provide coverage for both third party liabilities and car-related damages.

Although the Indian insurance market offers a wide range of insurance options, third party and comprehensive car insurance are the two most common types of coverage. The former, while offering decent protection against third party liabilities, is not sufficient to cover own-damages. A comprehensive policy effectively addresses this constraint.

Therefore, comprehensive insurance should be your first pick if you want to safeguard both your car and yourself from any financial liabilities resulting from an accident, theft, or loss beyond repair. However, you can remain with third party insurance if your budget for premiums is rather tight and you don’t mind incurring out-of-pocket costs to pay for your own damages at some point in the future.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales

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