Insurance is like a foreign language, and sometimes it’s hard to understand what everything really means. In insurance language, you are the “first party.” Your insurance company is the “second party.” The third party is the other participant in the transaction – the person with whom you may have an accident.
Full insurance or comprehensive insurance is coverage that pays for the damage to your vehicle and your property as well as the other people’s (the third party’s) property. Full insurance also covers losses that result from fire and theft. Third party insurance, on the other hand, covers only damages to the third party’s property (as well as medical damages). A liability-only policy is a third-party policy – it pays only for the expenses you incur to the other person when you are at fault. Some companies also offer third party insurance that includes theft and fire protection; in this case, your company pays for third-party costs as well as your own costs when they result from fire or theft, not collision.
So, how can you choose the best insurance for your own needs? Many people’s first instinct is “better safe than sorry,” so they just go for full insurance. This isn’t a bad idea, especially if you have an expensive car that is also expensive to repair. You never know when an accident might happen, so comprehensive insurance might give you peace of mind.
On the other hand, choosing third party insurance can help you lower your costs dramatically. If you have a used or less valuable car, you might not be concerned about damages to your car. Third-party insurance will take care of costs you incur when you are at fault.
However, you may be concerned about health and medical costs. If you choose third party insurance, it’s a good idea to find some way to cover medical costs – even if you’re a good driver, you might be in an accident that isn’t your fault and get hurt. Third-party insurance will not help you with your costs, and you don’t know if the other person’s insurance will cover all of your medical costs.
When choosing insurance, you may want to seek a lawyer’s advice so that you neither overpay for insurance nor miss a potential scenario for which you would like to have coverage.
Hopefully, this article has helped you make a few decisions about car insurance. As with anything else, you should look for a balance of price and value: purchase the best insurance policy that you can afford.