What Is Third Party Insurance?
Third Party Insurance: Generally, in damages recovery system there are two different types of insurance. One is the first party insurance and the other is called the third party insurance by the insurance companies. Usually in a third party insurance policy the insurance company will indemnify the injured person if he or she is legally held liable for injuries or damages done to third party. The first party is the insured person, the second party is the insurance company and the third party is the injured person who claims damages against the insured person. Read more about different types of insurance.
Some Important Features Of Third Party Car Insurance
- Third party insurance is compulsory for all motor vehicles and it plays a significant role in motor insurance.
- In third party insurance the insured person will not have any compensation for injuries but it covers damages to other people who are injured by the insured.
- The main beneficiary in third party insurance is the injured third party and the insured is only the beneficiary of the policy. Here the insurance company pays directly to the injured third party.
- As it is not possible to know in advance the liabilities, in third party policies the premiums do not vary with the value of what is being insured because the insured sum is the legal liability.
- Third party insurance is almost based on fault done by the insured. You have to claim for damages by providing evidence that the insured person had made fault and is legally responsible for the damages.
- Third party insurance involves the aid of lawyers.
Usually the third party insurance is not that popular as compared to first party insurance in the whole insurance company because you can never know the maximum amount to pay under third party policies.
Third Party Insurance and Other Insurance
Third party offers certain coverage including protection against fire and theft to policyholders. According to the law you have to compensate the damages if are guilty of accidents that occurs on roads. The law supports that you must have at least third party insurance policies to protect yourself from other people’s claim against you. Third party insurance can save your money without being spent from your pocket. If you are a third party policy holder then the insurance company will compensate for all the damages you have done. Other than accidents third party insurance also has policies that covers fire and theft risk. Suppose if your car catches fire or is stolen then the insurance company will offer disbursement to pay for the car.
As compared to other insurance, third party insurance may not have comprehensive coverage but it is most required when it comes to motor vehicles and road accidents. Most of the car insurance companies often do not have coverage on mechanical and electrical damages. Car insurance also does not have coverage on wear and tear. But however third party insurance has certain policies that cover all these risks. So if you really want to protect your vehicle and save your hard earned money then a third party insurance is most essential and is a must for all vehicle owners.