Which is Better: First Party or Third Party Car Insurance?

What is First Party Car Insurance?

When it comes to motor insurance, three types of parties are involved:

1. First Party: You, the customer
2. Second Party: The insurance company
3. Third Party: Apart from the first and second parties, for example, a pedestrian who your vehicle injures, or some other vehicle or someone’s property.

First-party car insurance is the policy that covers your interests. It is coverage for damage to your own car. However, keep in mind that third-party liability insurance is mandatory in India. Thus, you are not allowed to avail first-party insurance coverage without opting for third-party insurance.

Now, there are two types of first-party car insurance plans in India:

1. Standalone Own Damage plans, wherein the policy provides coverage only to the first party, i.e. to your own vehicle and self. However, to avail of this, you need a valid third-party-only car insurance plan.
2. Comprehensive Car Insurance Plans, which provide coverage to your own vehicle as well as third-party legal liabilities. Under this type of motor insurance, you can get coverage against damages arising from accidents, theft, natural calamities, fire, explosion, and a lot more.

Thus, a comprehensive plan is the most efficient option, as it covers the legally required portion and your own vehicle. Repairing your own vehicle without insurance can be a costly proposition, which is where insurance comes into play.

How does it work? First-party car insurance is a contract between the insurance company (the second party) and the policyholder. Here, the insurance company provides coverage for various types of vehicle damage in exchange for regular premiums paid by the policyholder.

Benefits of First-Party Car Insurance

First-party car insurance has several benefits that make it a reliable choice for vehicle owners. Here are some of them:

Extensive Coverage for the Vehicle

First-party car insurance comes with all-around coverage. It protects your vehicle with coverage for:

• Damages arising from an accident.
• Damages due to theft, fire, explosion or natural calamities.
• Personal accident.

Option to Extend Coverage with Add-Ons

When it comes to car insurance, know that one size does not fit all. To ensure adequate coverage for your car, you can opt for add-ons on your existing first-party car insurance. Some common and reliable add-ons include:

• Zero depreciation cover
• Return to invoice cover
• Engine protect cover
• Roadside assistance
• Consumables cover.

Peace of Mind

Knowing that your vehicle is protected against various kinds of damage offers peace of mind. First-party car insurance ensures you do not face heavy out-of-pocket bills.

What is Third-Party Car Insurance?

Third-party liability car insurance is a car insurance policy which provides protection against liabilities arising from damage to a third party or their property. Under the Motor Vehicle Act 1988, third-party car insurance is mandatory for legally driving your car in India.

How does it work? Third-party car insurance is a contract between the insurer and the policyholder. Here, the insurer promises to protect the policyholder against damages done to a third party or property by the insured vehicle.

Benefits of Third-Party Car Insurance

Purchasing third-party car insurance is beneficial in many ways, such as:

Ensuring Legal Compliance

Purchasing third-party car insurance is legally mandatory in India. Failing to do so can lead to penalties and legal liabilities that are best kept away.

Securing Protection At an Affordable Premium

Since third-party car insurance provides protection only for damages done to a third party or property, the premium is generally affordable.

Protecting Yourself Against Financial Liabilities

Even as a diligent driver, road accidents become inevitable at times. This is where your third-party car insurance comes into play. It protects you against financial liabilities that might arise in case you injure someone or damage their property with your insured vehicle.

First Party Car Insurance Vs Third Party Car Insurance: Key Differences Explained

Before deciding to purchase a particular kind of car insurance, it is important to understand the fundamental differences between them. Take a quick look at the table, highlighting the key differences between first-party car insurance and third-party car insurance.

Which One Do You Need?

Choosing between a first-party and a third-party car insurance policy requires a personal assessment. Here are a few considerations to keep in mind for specific needs.

Assess the specific needs of your vehicle based on its age, make, model, and other factors.

Assess the premium and coverage to ensure you are getting adequate coverage for the amount of money you are paying.

• Choose third-party car insurance if you own an older or low-value car, rarely use a particular car, and are looking for affordable, legally mandated coverage. This cover will save you from any liabilities that may arise if your vehicle causes damage to a third party.
• Choose first-party car insurance if you have a new, high-value or regularly driven car. This comprehensive car insurance policy provides all-around protection for your car. Damages caused by accidents, natural as well as man-made disasters, fire and theft are all covered under such a policy. First-party cover comes with several options to further extend coverage.

Explore and compare both types of policies to find the one that provides the best comprehensive coverage. Jio Insurance Broking lets you explore and purchase policies of some of the best car insurance companies in the country, in an instant.

To Sum Up

Both first-party and third-party car insurance policies come with a set of benefits. Where third-party insurance is a legal mandate, first-party insurance allows you to build comprehensive coverage for your vehicle. Now that you understand the fundamental differences between the types of policies and their functionality, you can make an informed decision and choose the right policy.