Difference between first party and third party car insurance in India


5 min read

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.

Visual Stories by PayBima

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.

Also Know: Who is a ‘First Party’ in car insurance policy

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.

Also Read: How to Claim Compensation under Third Party Two Wheeler Insurance?

8 Things to consider while buying car insurance plans

  1. 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.
  1. 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.
  1. 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.
  1. 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.
  1. 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.
  1. 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.
  1. 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.
  1. 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.

Car Insurance Renewal from PayBima

The bottom line

A car insurance plan provides maximum protection to vehicle owners with the latest features. It offers both first party and third party insurance in the market catering to the needs of the car owners. However, one should know the difference between 1st party and 3rd party insurance in detail before buying a plan. PayBima’s team of qualified experts can help you make an informed decision when you decide to buy an insurance policy.

Car Insurance from PayBima

Also Read: Car Insurance Policy Comparison | Five Reasons Why Car Insurance Is Necessary In India?

Found this post informational?

Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance, and Investment section. You can visit PayBima to Buy Insurance Online.

FAQs on Difference between first party and third party car insurance in India

What is the difference between 1st 2nd and 3rd party insurance?

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.

What are the disadvantages of third party car insurance?

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.

What is difference between third party and first party car insurance?

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.


View this post on Instagram


A post shared by paybima (@paybima)


Feb 01, 2022
Author Bio
Author Image

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.

Related Blogs

Would love to hear from you

Share your candid feedback. Your email address won’t be published, we promise!

All fields are required

Find your suitable insurance plan

Speak to our advisor

Latest Posts

Mahindra Insurance Brokers Limited (A Mahindra Group Company) - Unit-202, A-Wing, 2nd Floor, Amiti Building, Agastya Corporate Park, Kamani Junction, LBS Marg, Kurla West, Mumbai - 400070. Tel: +91 22 66423800

Licenced by IRDAI License No. 261; License Validity : 17-05-2025; Category : Composite Broker; CIN : U65990MH1987PLCO42609 Member of Insurance Brokers Association of India (IBAI).

Insurance is the subject matter of solicitation.

For a seamless experience, use the latest version of Chrome/Firefox/Internet Explorer.

Copyright © 2024 Mahindra Insurance Brokers. All Right Reserved.

Get A Call Back
Get A Call Back