Difference between first party and third party car insurance in India
.png)
Naresh recently bought a new car from a dealer for his personal use. The dealer recommended buying car insurance to get protection in case of accidents and other issues. Getting the importance of car insurance, Naresh decided to go ahead and explore further. The insurance company explained the differences between first-party and third-party insurance in detail to help Naresh take an informed decision regarding car insurance purchase.
Knowing the types of car insurance
While buying car insurance, one should know more about the types from different sources. This, in turn, gives ways to gain more ideas in detail that will help make the right decision.
Below is the list of insurance plans available for car owners.
1. First party car insurance
The first party refers to a person who buys the insurance from an insurer. First-party car insurance provides damage cover to the person who owns the vehicle. An insurer is the second party in an insurance plan and it should cover any losses to the first party due to natural calamities, man-made mistakes, and other problems. The insurance company also offers comprehensive insurance that provides personal accident cover to the first party when he/she suffers from personal injuries due to accidents.
2. Third party car insurance
A third party is someone other than the first party and second party. It refers to anyone who gets damaged or affected by the actions of the first party while driving a car on the roads. The second party should pay compensation for losses to the third party on behalf of the first party. Every car owner should have third-party insurance in India that will help get protection against liabilities.
8 Differences between First-party and third-party car insurance
A car owner should know the difference between 1st party and 3rd party insurance before buying a policy. Moreover, it gives ways to invest money depending on the needs. Not only that, it provides ways to claim amounts for damage and injuries as soon as possible.
- Coverage: The first insurance provides coverage for accidents and other losses under a comprehensive plan. At the same time, a 3rd third-party insurance offers coverage for third-party only when the first party causes any damage and injuries.
- Personal accident cover: In case of a car accident, a first-party will get personal accident coverage up to 15 lakhs from the second party. On the other hand, a third party will receive amount depending on the extent of damages decided by the Motor Accident Claims Tribunal board.
- Property damage cover: An insurer will not cover the property damages when the first insurer damages his/her own property with the insured vehicle. It will pay the damages to the car under a comprehensive plan. A third party may get up to Rs.7.5 lakh coverage for party damages on behalf of the first party.
- Insurance benefits dispensed: First-party insurance offers coverage under a comprehensive plan as part of its own damage cover. On the other hand, a third party can receive benefits under both first party and third party car insurance.
- Customization: Car owners can customize their insurance plans by adding add-ons in first-party insurance that will help improve the coverage. No customization is available under a third-party insurance plan.
- Premium prices: The premium prices of third-party car insurance plans are low when compared to a comprehensive car insurance plan. Insurers will determine the premium rates of first-party insurance based on several factors and a policy buyer should understand them before selecting a plan.
8 Things to consider while buying car insurance plans
- Understanding the terms: Before buying a car insurance plan, customers should understand the terms used. They should know what is first-party and third-party insurance that will help choose the right one accordingly.
- Coverage range: A policy buyer should determine a coverage range while purchasing a plan from an insurer to get the maximum advantages. Besides that, he/she should consider reading the features and other things in detail.
- Add-on covers: While purchasing a car insurance plan, vehicle owners should consider choosing add-on covers that will help ensure more protection. Since each add-on has its own price, it is necessary to evaluate the same closely.
- Claim settlement ratios: It is important to select an insurance company that has high claim settlement ratio. This is an important indicator of how successful the claim settlement would be.
- Installing anti-theft devices: Installing anti-theft devices in car vehicles will reduce the premium of insurance plans to a large extent. Moreover, they allow car owners to save more money when purchasing a policy from an insurer.
- Portability: Portability is an important factor to consider while buying a car insurance plan. This is because it allows a car owner to switch to a different insurer during the renewal process in case they get a better deal.
- Online purchase: Buying car insurance plans online allows a policyholder to save both time and money effectively. Most insurers offer discounts on car insurance plans which in turn helps the buyer to minimize the expenditure. Additionally, they help select a policy which caters to the needs and budgets of a person.
- Reviews: It is important to read reviews of car insurance companies online to get valuable feedback of existing customers. At times the policy might be cheap but the support and claim settlement of the insurer might be poor defeating the purpose of buying an insurance in the first place.
First-party refers to the insured individual, second-party is the insurance provider, and third party is the person towards whom damages are owed by the first-party in an accident.
Drawbacks of Third Party Insurance
The cost of repairs to your vehicle are NOT covered by Third Party Insurance. There is also no cover if your car is stolen or damaged by fire. If it's damaged in an attempt to break in, that's not covered either.
First-party insurance covers the damages or losses caused to the policyholder or his/her vehicle. The damages can be sustained during riots, strikes, earthquakes, floods, fire, theft etc. Third-party insurance covers damages or losses caused only to the third party due to an accident.
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
Other Motor Insurance Products
Latest Post
Your health insurance policy gives you a No Claim Bonus when you fulfil your policy term without needing to make a claim. Your premium payments will decrease step by step through this feature. The bonus system benefits everyone involved in the insurance process. It helps customers to practice better healthcare habits and brings savings on insurance expenses.
There is no question, in fact, that daughters bring a special kind of sparkle into our lives – along with an endless list of questions, a closet full of dresses, and some very specific birthday party themes. But beyond the laughter and everyday chaos, we need to understand that there is a real responsibility on our shoulders: making sure they grow to be healthy, strong, and ready to take on the world.
Marriage is built on shared dreams, countless compromises, and a commitment to protect each other through thick and thin. While love, trust, and communication form the emotional foundation of marriage, a little bit of financial planning doesn’t hurt either. This is exactly where spouse term insurance steps in — a simple yet powerful way to safeguard your future together.
When managing insurance policies, one term that often comes up is the “Grace Period.” It’s a window of opportunity provided after the premium due date, allowing policyholders to renew their insurance without losing accumulated benefits. However, this grace period does not work the same way across all types of insurance. Understanding how it differs between health, life, and car insurance is crucial for avoiding lapses and ensuring continuous protection.
In a world where flexibility and better service are increasingly expected, health insurance portability allows policyholders to move from one insurer to another without losing the benefits they’ve already earned. Introduced by the Insurance Regulatory and Development Authority of India (IRDAI), this provision empowers individuals to seek better coverage, improved customer service, or lower premiums without the fear of starting from scratch.
Speak to our Advisor
+91
