A third-party auto insurance policy protects you from legal liability in the event of third-party losses. If your vehicle causes damage to a third party’s vehicle, personal property, or bodily harm, you may be liable for the resulting financial loss.
It is a plan to compensate the third party on your behalf for these financial losses.
In essence, third-party insurance is a form of liability insurance in which, regardless of the cause of the damages or losses, the first party is responsible for them.
Third-party coverage protects against claims for damages and losses incurred by a driver who is not the insured principal and, therefore, is not covered by the insurance policy. The third party is the driver who caused the damages.
Parties Involved in Third-Party Car Insurance
Part of understanding this insurance is identifying the parties involved.
First party: The policyholder or insured purchasing the policy
Second party: The insurance company
Third-party: The person or business filing the claim for damages
Characteristics of Third-Party Car Insurance
- The cover is required. If you are discovered without a valid policy, you may face legal complications, including fines, penalties, and, in extreme cases, imprisonment.
- If you purchase a new vehicle, you should purchase continuous third-party coverage for three years. This extended coverage is also required.
- For vintage automobiles, however, only annual coverage is available.
- The premium is uniform across insurance providers.
Benefits of Third-Party Car Insurance
These are the benefits of this type of Insurance:
1. It has a swift and simple purchasing procedure.
2. The insurance coverage is affordable even for an ordinary citizen.
3. The insurance permits the insured to drive legally on public roads and, by extension, protects them from legal consequences.
4. It protects the insured from any financial strain caused by an unforeseen event.
Coverage for Third-Party Car Insurance
A third-party auto insurance policy protects you financially if your vehicle causes any of the following damages:
- The passing of a third-party
- Bodily harm inflicted on a third party
- Damages to third-party property
In any of these situations, if you incur a financial liability, the policy would cover the liability and pay you compensation. However, if your vehicle is damaged or stolen and you incur a financial loss, the insurance policy willn’t cover such a loss.
What it Doesn’t Cover
It’s important to know that liability insurance is to protect a third party, not the covered person.
Damages done to your vehicle
WalletHub says third-party coverage does not cover damage to the first party’s car. If the third party is found to be at blame and has insurance, their insurance company will pay you.
Your liability insurance can’t pay for the fixes to your car. Third-party insurance does not cover you; it only covers someone else. If you are the only one in an accident and the damage is only to you or your car, this insurance won’t pay for it.
Your Health Care Bills
This insurance does not pay for your hospital bills.
Medical Bills for an Uninsured Driver
If another driver causes an accident and doesn’t have third-party insurance, your liability policy won’t help pay for your medical expenses or property damage.
How Does it Work?
In an accident where the policyholder will be judged legally responsible for another party’s injuries or property damage, the insurance company will have to pay the policyholder’s legal defense costs and other related expenses.
The liability insurance coverage pays for any harm the insured causes to another person or their property. After an incident, the insured must promptly report it to their insurer.
Other motorists will launch a claim against you if they hold you responsible for the accident or reasonably assume that you are at fault. Your insurance company will presumably foot the bill for repairs.
Conclusion
You can avoid paying thousands, if not tens of thousands, of dollars in claims by purchasing third-party insurance. It’s possible you won’t need it, just like any other insurance.
