First Party v/s Third Party Car Insurance: Understanding The Difference
One of the best things you can do to protect your car is to buy car insurance. After all, the vehicle is an essential asset that makes our daily lives easier - be it a road trip over the weekend or the regular hustle of making it to the office on time!
The different types of parties involved in car insurance
While purchasing insurance for your car, it is not only enough to look at some important aspects of the policy, such as the cost and the coverage but also understand what terms like first-party car insurance and third-party car insurance stand for. This knowledge, in turn, can help you understand the policy document so that you can make an informed decision.
When purchasing online vehicle insurance, most first-time buyers wonder about the various terms used in the policy documents. It is absolutely essential for one to understand these terms as they are commonly used in the insurance domain. This knowledge can be especially useful not only at the time of the purchase but also during the motor insurance online renewal and while filing a claim for damages.
1. First party: The first party in the car insurance policy is the owner of the car or the person in whose name the policy is registered. This first party has to pay their car insurance premium to their insurance provider and can claim the benefits under the insurance.
*2. Second party: *The second party refers to the car insurance company that protects your vehicle and compensates for the losses or damages to your car. It is the insurance provider with whom the first party has signed the insurance policy contract. Therefore, when an accident takes place, the second party is entitled to settle the claims filed by the first party, provided that the first party has ensured timely payments of premiums.
3. Third party: A third party is a person or a vehicle owner who has been affected by the actions of the first party’s insured vehicle in any way. For example, if the first party’s vehicle has caused damage or injuries to the third party’s vehicle or owner, then the insurance benefit is paid by the second party to the third party.
When you buy car insurance, be sure to understand that car insurance plans are meant only for the first party and the third party. The second party is entitled to settle the claims, subject to the authenticity of the event and the information on the documents.
What are the different types of car insurance in India?
A car owner has the option of choosing either between comprehensive car insurance or third-party car insurance:
● First-party insurance or comprehensive insurance
A comprehensive car insurance policy protects the interests of the policyholder’s car. In case of any natural calamity, man-made disaster or total loss of the vehicle (theft or complete damage), the first party can file a claim for the damages with the second party, who will settle the claim amount, after considering the extent of damages and verifying the information.
The comprehensive car insurance also covers third-party claims. Hence, if a third party is affected by the first party’s insured vehicle, which includes injuries, property damage or loss of life, then the second party will settle the claim on the first party’s behalf.
Moreover, the comprehensive insurance cover can be customised to take care of certain damages with the inclusion of add-ons selected by the policyholder.
● Third-party insurance
Third-party car insurance covers only the damages incurred by a third-party person or vehicle. In case of bodily injuries, death or damage to the third-party property or person, they are entitled to the insurance benefits of the first party. Therefore, the second party, or the insurance provider of the first party, pays the compensation on the first party’s behalf. The third-party car insurance price is less than the comprehensive insurance cover because of the lower extent of coverage.
As stated under the Motor Vehicle Act 1988, a person must get at least third-party online vehicle insurance. Having this insurance cover is a legal requirement, without which any car owner will have to pay a traffic fine or face the legal consequences. Therefore, it is advisable to immediately get third-party car insurance online.
To sum up
TATA AIG provides online vehicle insurance for cars with an option to choose between first-party or third-party insurance. Having first-party insurance for a car means that first-party, as well as third-party insurance, are covered. However, third-party insurance covers only the third party’s interests and nothing more.
TATA AIG also offers a motor insurance online renewal so that customers can easily renew their insurance policies and continue to enjoy the benefits of their car insurance cover. The TATA AIG four wheeler insurance renewal is an easy-to-follow process. While renewing your policy, you can calculate your own car insurance premium online. Choose TATA AIG for a smooth insurance experience today!
Here are some Frequently Asked Questions you may want to refer to:
1. Which insurance is best: first-party or third party?
This choice would depend on the type of coverage you prefer. But for the optimal coverage and the safety of both the first and third parties, TATA AIG recommends the comprehensive car insurance package.
2. What is the difference between 1st party and 3rd party insurance?
In first-party insurance, the benefits are for the insured car and its owner as well as the third party if needed. Third-party insurance policies only take care of damages or injuries/death of third-party property or person.
3. Is it worth getting third-party insurance?
Third-party insurance is mandatory by law if you want to drive your vehicle on the roads. One must have a third-party insurance cover.
4. What is 3rd party insurance?
Third-party insurance is the basic insurance cover that takes care only of third-party damages. The recipient of the claim is not the policyholder but another person or vehicle affected by the first party’s insured car.