Insurance helps minimize the impact of unexpected events like a road traffic accident. Accidents happen within the blink of an eye — all it takes is one bad decision to cause (or suffer from) potentially dangerous bodily and economic loss.
And while getting into an accident is an extremely stressful situation in itself, the legal and economic repercussions that follow an accident can be even more annoying and difficult to deal with if you’re not adequately covered.
Many countries make it compulsory for vehicle owners to buy third party insurance. But what exactly is third party insurance and is it enough? Let’s find out.
What is third party insurance
Third party insurance is meant to protect you against the claims of another person. In other words, it protects you from the financial (and legal) repercussions that may follow when you cause damage to another person or their property.
There are many types of third party insurance, including public liability insurance and product liability insurance, which help industries and companies remain safe against legal actions initiated by consumers.
One common type of third party insurance is automobile insurance, which drivers are required to purchase. When you’re in an accident which was due to your fault, the other party is entitled to receive compensation for their hospital bills and property repair costs from you.
And these costs can sometimes be huge, which means that it’ll be impossible for you to pay them out of your pocket. This is where third party insurance comes in. When you purchase third party insurance, your insurer will pay for the damages you caused to someone else (also known as the third party).
In some places, you can get fined (or jailed) if you’re found driving without third party insurance. The law makes it compulsory so that people can get easily compensated when they get in an accident, and for people to bear the financial responsibility for their actions.
Is third party insurance enough
Yes and no. Yes if you’re confident that no harm will ever come to you or your vehicle when you’re out on the roads and no if you feel otherwise. Because if you haven’t noticed yet, third party insurance does nothing to protect you and your vehicle in case you get in an accident.
All it will do is rid you of the financial responsibility of compensating someone that you caused damage to. But what about your medical bills and repair costs of your car? Well, that’s what other kinds of insurance are for and you can click here to view the different types of insurances available from the provider NRMA.
One type that’s very useful for protecting your car against various kinds of damage is comprehensive car insurance.
So what’s the difference between comprehensive and third party car insurance
Comprehensive car insurance is meant to protect your car from all kinds of damage. But in addition to that, comprehensive car insurance will also pay for the damage you cause to other vehicles. In other words, it’s a liability insurance that also protects your car.
There’s a wide range of situations where your car might get damaged apart from being in an accident. These include theft, storms, floods, and fires. A comprehensive car coverage will cover damage from all these situations, so you can see right away why it’s far superior to the compulsory third party insurance.
But you should know that you’re supposed to pay a certain amount from your pocket before your comprehensive car coverage kicks in. This is called the deductible and it’s already decided when you buy a policy.
And in cases where the damage to your car will not be feasible to repair, your insurer might take your car and pay you its market price instead.
Options other than comprehensive car coverage
Now, if you already have third party insurance and feel that comprehensive car insurance might be a bit redundant, other options do exist.
One option is standalone own-damage car insurance, which will not cover any damage you cause to a third party. It’s only meant to cover the damages that you incur, so it can be purchased on top of your third party insurance to provide complete protection.
If you live in an area where certain types of car-damaging factors are prevalent, such as wildfires or theft, you can purchase third party fire and theft insurance, which will cover damage from fire and theft as well as damage you cause to a third party (but no damage from an accident).
But in the end, you’ll realize that comprehensive car insurance is really the best option because it provides protection from all kinds of damage in a single policy. And so the answer to your question is no, third party compulsory insurance is not enough.
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