Difference Between First Party and Third Party Insurance Policy

Recently, the Supreme Court of India has given a judgement that every car or bike will have to take insurance policy mandatorily for at least 3 years. The new rule has been in force since January 2018. Before this, an individual could take the insurance policy at will for car or bike for one year. Now it has mandatorily been extended to 3 years at once. In this column, I will give you a detailed difference between first party and third party insurance policy i.e., First party Vs. Third party insurance policy.

At the time of buying an insurance policy, you should consider certain matters like insurance cover, the capital insured, terms and conditions, etc. Many insurance buyers remain in the dilemma for which type of insurance policy to opt for his bike or car. Many of us do not have a clear idea about the difference between a first party insurance policy and a third party insurance policy.

What is Comprehensive or first party Insurance policy

Comprehensive or first party policy covers a total protection for your car or bike. If you take first party plan you are eligible to get complete protection for your vehicle. The policy covers up the vehicle from any damages caused by an accident or a road mishap. Any damage to the vehicle, theft of the vehicle, personal accident, third party legal liability all these are insured in comprehensive insurance or first-party insurance.

The policy provides coverage of own damage to the insured vehicle caused by,

  • Accident by external means like fire, explosion, self-ignorance, lighting, earthquake, landslide, flood, or any other natural calamity.
  • Accident due to hit to any other vehicle, tree, stone, pillar, wall, a person or any other object.
  • Transit by road, rail, inland waterways, air, lift.
  • Burglary, housebreaking, theft.
  • Terrorism, riots, strikes, malicious acts.

Comprehensive insurance or first-party insurance does not cover or excludes following conditions,

  • Wear & tear and aging of vehicle, Depreciation, Mechanical or Electrical breakdown.
  • In the case of tubes or tyres bust or unable to work properly the owner gets 50% of the total cost from the insurer.
  • Damages caused due to war and nuclear attack.
  • If the driver of the insured vehicle remains under the influence of alcohol or other intoxicants. In other words, if the driver is drunk or remains addicted to drugs or anything else the insurer is not liable to pay the bill.
What is Third party Insurance policy

Third party insurance provides coverage to loss of the victim. If you are a third party policyholder and you cause damage to any other vehicle or any other person, you are eligible to get the fund for person or vehicle you cause damages or injuries. You as a policyholder will not be eligible to receive any coverage for yourself or your vehicle. Though you pay for the insurance, it does not provide any other facility or coverage. This scheme does not ensure the incident of theft or any other natural calamity.

Difference between First Party and Third party Insurance policy

Actually, third party insurance is for obligation only. According to Government rules, a vehicle must remain under an insurance coverage. The insurance may be of any kind first party or third party. As first-party insurance is costly, people choose the third party insurance scheme for their vehicles. Third party insurance is for name only.

If you have any query about the difference between first party and third party insurance policy, feel free to comment in the box below. If you loved the post then please share with your loved ones.

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