Before we understand the 1st party vs 3rd party insurance options, we need to know who these parties are. Every car insurance policy involves three parties, and each one plays a specific role.

First party

The first party is you, the person who owns the car and buys the insurance policy. Since you own the policy, you need to pay the insurance premium every year to keep it active. If your car is stolen or damaged in an accident, you can make a claim.

The insurance company will check your claim details and verify everything before paying you the amount. This claim money helps you fix your car without spending too much from your savings.

Second party

The second party is the insurance company from whom you buy a car policy and sign the agreement. Its primary responsibility is to compensate you with money when you file a genuine claim for vehicle damage.

However, the insurer only processes claims if you've been paying your premiums on time without missing any due dates. Before releasing any payment, the insurance company checks all the details and verifies the actual damage to your car. It usually sends an inspector to examine your car and make sure your claim matches the policy terms.

Third party

The third party is any person or vehicle owner affected by your car's actions. If you accidentally hit someone's automobile while driving, they become a third party. They could also be someone whose property you damaged, like a shop wall or a pedestrian you injured.

When such unfortunate accidents happen, your insurance company steps in and pays compensation to the affected people. This arrangement protects you from paying huge amounts from your own savings to cover someone else's losses.

Now that you know the parties involved, let's look at the two main types of insurance available. The difference between first-party insurance and third-party insurance is mainly about who gets the coverage.

First-party car insurance

First-party car insurance, also called comprehensive insurance, protects your own car. If your car gets damaged in an accident, is stolen, or is destroyed by fire or natural disasters, you can claim the repair/replacement costs.

This type of policy also covers third-party damages. So if your car hurts someone else or damages their property, that's covered too. Many people wonder about the difference between comprehensive and first-party insurance, but they are actually the same thing. With comprehensive coverage, you get complete protection for yourself and others. Hence, it costs more than basic third-party insurance.

Third-party car insurance

A third-party car insurance only covers damages you cause to others. It doesn't protect your own car at all. If you hit someone's vehicle or injure a person, your insurance will pay for their losses. But if your own car gets damaged, you will have to pay for repairs. This type of insurance is cheaper because it offers limited coverage.

However, having third-party insurance is mandatory by law in India. According to the Motor Vehicle Act 1988, you must have at least this basic coverage to drive legally on the roads. Without it, you can face fines or legal trouble.

Understanding the main key difference between comprehensive and first-party insurance helps you make smarter choices when buying car insurance in India.

Coverage

First-party insurance, also known as comprehensive insurance, covers damages to your own car along with any third-party damages. If you get into an accident, this policy pays for your car's repairs, replacement parts and even total loss situations. It also covers natural calamities like floods, earthquakes, fire, theft and vandalism that might damage your vehicle.

On the other hand, third-party insurance only covers damages you cause to others and their
property while driving. If you strike another person's vehicle, this insurance will compensate them for their losses, but it will not cover your own. You are responsible for paying for the damages to the third-party person, vehicle or property.

Cost

First-party insurance comes with a higher premium cost than third-party insurance because it offers much wider coverage for multiple situations. Since it protects both your car and covers third-party liabilities, insurance companies charge more to provide this extensive protection. The premium amount depends on your car's value, age, location and the add-ons you choose for extra coverage.

Meanwhile, third-party insurance has significantly lower premium costs because it only covers damages to others, not your vehicle. This makes it an affordable option for car owners who want to meet minimum legal requirements without spending too much. However, lower cost means you get very limited protection and no coverage for your own car's damages.

Legal Requirement

First-party insurance is completely optional under Indian law, though it's highly recommended for complete vehicle protection. Many car owners prefer comprehensive insurance despite the higher cost because it gives them complete peace of mind and security.

However, third-party insurance is mandatory by law for every vehicle owner in India. Under the Motor Vehicle Act, driving without insurance may result in hefty fines. If found driving without third-party insurance, you may also face legal action.

Claim Benefits

In first-party insurance, you, as the policyholder, receive the claim amount directly when your car gets damaged. When you file a claim for repairs, theft or any covered damage, the insurance company pays you after verification. If you opt for a cashless claim facility, the repair cost is settled directly with the network garage and you do not have to spend from your pocket.

In third-party insurance, the claim amount goes directly to the third party who suffered damages because of your car. If you accidentally damage someone's vehicle or injure them, the insurance company pays compensation to that affected person. You don't receive any money for your own car's damages since this policy doesn't cover your vehicle.

Damage Protection

First-party insurance protects your car against various types of damages, including accidents, natural disasters, theft, fire and vandalism. Whether a tree falls on your car during a storm or someone scratches it in a parking lot, you're covered. It even includes damages from riots, explosions and other man-made calamities that could destroy or damage your vehicle.

Third-party insurance only protects you against liabilities when you damage someone else's property or accidentally injure another person. It covers the legal and financial responsibility you have towards others, but offers absolutely no protection for your own car. If your car gets stolen, damaged in floods, or hit by another vehicle, you won't get any compensation at all.

Flexibility

First-party insurance offers great flexibility, as you can customise it by adding various add-ons to strengthen your coverage. You can add zero depreciation cover, engine protection, roadside assistance, consumables cover and many other useful features to your policy. These add-ons help you get better protection for specific situations that standard policies might not cover.

Third-party insurance offers no flexibility at all since it's a basic, standard policy with fixed coverage and limitations. You cannot add any extra features or customise it according to your needs because it only covers third-party liabilities.

• Complete Vehicle Protection: First-party insurance covers your car against accidents, theft, natural disasters and fire incidents comprehensively. You receive full financial protection for repair costs without worrying.
• Personal Claim Settlement: You receive the claim amount directly in your bank account. In case of a cashless claim facility, the claim amount is settled directly by the insurer with the network garage. This ensures quick repairs without bearing heavy expenses from your own pocket.
• Customisable Coverage Options: Add valuable add-ons like zero dep, engine protection and roadside assistance to your policy. These add-ons provide enhanced protection tailored specifically to your driving needs and requirements.
• Protection Against Natural Calamities: Your vehicle stays protected during floods, earthquakes, cyclones and storms that cause unexpected damage. This coverage saves you from bearing enormous repair costs during environmental emergencies affecting your area.
• Peace of Mind While Driving: Drive confidently knowing both your car and third-party liabilities are fully covered under one policy. This protection removes financial worries about unexpected accidents or damage on the road.

• Affordable Premium Costs: Third-party insurance is the most affordable means to fulfil legal requirements. You can legally drive on Indian roads without spending heavily on comprehensive coverage options for your vehicle.
• Legal Compliance Guaranteed: Stay compliant with Motor Vehicle Act regulations by maintaining mandatory third-party coverage always. Avoid hefty fines and legal troubles while driving on Indian roads with proper documentation and protection.
• Protection From Liability Claims: Get financial protection against compensation claims when you accidentally damage others' property or vehicles. The insurance company handles expensive legal settlements and injury compensation amounts on your behalf.
• No Vehicle Inspection Needed: Renewing third-party insurance doesn't require vehicle inspections or paperwork verification. The simple renewal process saves your time and effort compared to comprehensive policy renewals requiring detailed documentation.
• Suitable for Older Vehicles: If your car has low market value, third-party coverage provides essential legal protection affordably. You meet mandatory requirements without paying high premiums for covering an ageing vehicle's depreciated value.

Purchasing car insurance in India with TATA AIG is straightforward and hassle-free through the online platform. Whether you need comprehensive first-party coverage or basic third-party insurance, the digital process completes within minutes.

1. Visit Our Official Website: Open the TATA AIG website and navigate to our car insurance section for purchasing your preferred policy type.

2. Enter Your Vehicle Details: Provide your car's registration number, model, variant, manufacturing year and fuel type for generating accurate premium quotes from us instantly.

3. Choose Your Policy Type: Select between our comprehensive first-party insurance or standalone third-party coverage based on your protection needs and budget constraints carefully.

4. Select Add-ons and IDV: Choose additional covers like our zero depreciation or engine protection, then finalise your car's Insured Declared Value with us appropriately.

5. Make Payment and Download: Complete the payment using your preferred online method, then immediately download your policy document from your registered email address with us.

1. Report the Incident Immediately: Contact our customer support team or use our mobile app to report the accident or damage within twenty-four hours of occurrence.

2. Get Vehicle Inspected: Schedule a vehicle inspection with our surveyor, who will assess the damage and determine the repair costs accurately for processing.

3. Submit Required Documents: Provide your policy documents, driving license, FIR copy (if applicable) and damage photographs to us for verification and claim processing.

4. Choose Your Repair Option: Select either cashless repair at our 5,900+ network garages or reimbursement option if you prefer getting repairs done at your trusted workshop.

5. Receive Claim Settlement: After our verification and repairs, receive your claim amount directly within a few days if you have opted for a reimbursement claim.

Choose First-Party Car Insurance If

• Your Car is New or High-Value: Comprehensive coverage is recommended when your vehicle is new or expensive, which ensures maximum financial protection against unexpected damage.
• You Want Complete Financial Security: Opt for a first-party policy if you prefer avoiding out-of-pocket expenses for repairs after accidents, theft or natural disasters.
• You Drive Frequently in High-Risk Areas: Choose comprehensive insurance when regularly driving through congested traffic zones, accident-prone routes or areas with unpredictable weather conditions.
• You Have a Car Loan: Banks and financial institutions typically mandate comprehensive coverage for financed vehicles, making first-party insurance necessary for loan compliance.
• You Value Customised Protection: Select a comprehensive policy when you want to enhance coverage with add-ons like zero depreciation, engine secure, roadside assistance, etc.

Choose Third-Party Car Insurance If

• Your Vehicle Has Depreciated Significantly: Basic third-party coverage is suggested when your car's current market value is low, making comprehensive premiums economically unviable.
• You're on a Tight Budget: Opt for a third-party policy when you need affordable legal compliance without spending heavily on broader coverage options available.
• Your Car is Rarely Used: Choose basic coverage when your vehicle stays parked most of the time, which reduces accident risks and makes comprehensive insurance financially unnecessary.
• You Can Afford Self-Repairs: Select third-party insurance when you're financially prepared to handle your own vehicle's repair costs from personal savings independently.
• You Want Minimum Legal Coverage: Pick a basic policy when you simply need mandatory Motor Vehicle Act compliance without additional protection features or benefits.

Picking the right car insurance in India depends on your car's age, your budget and daily driving habits. A comprehensive car insurance policy gives full protection for new or expensive cars that you use regularly on busy roads. Basic third-party coverage works fine for old cars with low value when you rarely drive them far.

Consider how much your car costs, how often you use it and whether you can pay for repairs yourself when choosing your car policy today.

TATA AIG makes buying third-party car insurance or a comprehensive policy super easy with just a few clicks online. We have 5,900+ garages across the country ready to fix your car quickly after any accident happens. Just open our garage locator tool to find the closest workshop where you can get repairs done without paying cash up front.

We help you during tough times with fast claim approvals and 24/7 customer support that makes owning a car less stressful and more enjoyable.