What is third party insurance and what are its advantages?
Owning a vehicle has become relatively easy. One could walk into a showroom, pay the selling price or take out a loan. Regardless of the vehicle you choose to purchase, you should remember to also purchase vehicle insurance to safeguard yourself and the vehicle from unforeseen circumstances. There are different types of insurance covers available for vehicles – comprehensive and third party insurance being the most common ones. While the former is compulsory in the event that your vehicle is financed and is the best option, let’s find out what third party cover is and what are the benefits.
What is the meaning of third party insurance?
Third party car insurance offers a basic and more affordable form of cover that covers the damages that you may cause to another vehicle in the event of an accident. While costs differ from company to company, the cost of repairs is normally fully covered minus the excess. If your car is damaged through your own fault, you will have to cover the repair or replacement costs yourself. Third party insurance covers the costs if your vehicle causes damage to another vehicle.
Who is third party cover best suited for?
This type of cover is best suited to people who have an older or low-value vehicle that is already paid off. It is also great for people who do not drive often or for very long distances. This minimizes the potential risk of being involved in an accident, or having to pay towards the high costs of repair or replacement parts.
Who is the third party?
If you decide to take this type of cover you would need to know who and what is covered. The third party is the person whose vehicle has been damaged because of your actions, and who lodges an insurance claim against you. The first party is you, the second party is the insurance company who settles any claim that arises.
Benefits of third party insurance
- It will protect you – While it provides limited cover compared to comprehensive cover, it protects you from being sued in your personal capacity.
- Peace of mind – you are prevented from undergoing any financial stress and may focus on coping with the incident and prevent being stressed.
- Affordable coverage – the premium paid for this type of cover may vary from insurer to insurer but is much cheaper than comprehensive cover.