What is the Difference Between 1st Party and 3rd Party Insurance?

2 min read

As soon as you get a car in India, you need to get an insurance policy for it too. When choosing motor insurance, you have the option to choose between a comprehensive plan and a third-party insurance plan. What are these plans and what are the differences between the two? Read on to get the answers.

Comprehensive or 1st Party Insurance Meaning

The first part in car insurance refers to the owner of the car, who is also the policyholder. When you buy a comprehensive car insurance plan, the first-party cover is available. This means the damages incurred to your vehicle in an accident or theft will be covered.

Third-Party Insurance Meaning

There are some exclusive third-party car insurance plans available in India. Here, only the damages incurred to a third party in an accident will be covered. The first party will not be covered.

Difference Between 1st Party and 3rd Party Insurance

There are some very basic differences between 1st party car insurance and 3rd party car insurance. They are:
1. Cover: There is a major difference in the list of covers. In a third-party plan, you only get compensated for damages to a toy vehicle/property and bodily damages to a third party. You also get legal compensation if you are taken to court by a third party following an accident. In a first-party plan, you get all the covers included in a third-party plan. Additionally, you get coverage for damages to your own car as well. Also, you get compensated if your car is damaged in a natural calamity, riot, etc or if it is stolen.

2. Price: A third-party car plan is cheaper than a first-party car plan. The covers are limited in the former hence the price is lower.

3. Flexibility: You cannot customize a 3rd party car insurance plan in any way. The coverage is fixed. A comprehensive plan, however, is more flexible and can be customized with riders.

4. Compulsion: It is legally compulsory for every vehicle owner to have a third-party vehicle insurance cover in India. There is no such compulsion to get a 1st party car insurance plan and the coverage is completely optional.

First-Party Insurance vs Third-Party

Now that you know what is third-party insurance and what is first-party insurance, you would be happy to know that both types are available online. You can easily buy comprehensive or third-party car insurance online instantly. This apart, both the types of plans offer a personal accident cover which proves to be very helpful.

The Final Word

Make a list of your requirements and then choose a good type of car insurance plan. Whether you buy a comprehensive plan or a 3rd party vehicle insurance online, make sure you compare car insurance plan and locate the best policy. The same holds true for a comprehensive or third-party bike insurance policy. Motor insurance is very easy to get these days so go ahead and buy a plan right away.

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Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

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