Third party car insurance can be defined as liability insurance. This means that it is designed to provide protection to other motorists and property owners for the damage you cause. It pays for the injuries of the occupants of the other vehicle, cost of repairing it, as well as damages caused to sign posts, mailboxes, fences or sheds when you are determined to be the at-fault driver.
Third party car insurance doesn’t provide any protection for the driver of a vehicle. It is not the same thing as collision or comprehensive coverage, which protect against damage to your vehicle. It is the most basic of auto insurance coverage and is mandated in some form in every state.
Enter your zip above for third party car insurance quotes!
Collision and Comprehensive Coverage
Collision coverage pays for the cost of repairing your vehicle when the damage is caused by making contact with another car or an object, such as a guard rail or a sign post. Comprehensive coverage pays out when the vehicle is damaged by other causes, such as fire, theft, hail, or flooding. Neither of these are third party insurance and do nothing for damage you cause to others.
Liability and Minimum Levels of Coverage
In most parts of the United States, vehicle owners are required to have liability or third party car insurance in place. It takes the form of bodily injury and property damage liability coverage. State law sets out the minimum level of coverage that must be put in place.
The legislation sets out a set level to pay for the medical bills, lost wages and expenses incurred as a result of the accident for one person. It also has a limit for paying for all injuries and expenses of multiple victims of the same accident. The bodily injury liability coverage also pays for funeral expenses if the accident resulted in one or more fatalities.
The minimum requirement for property damage coverage is meant to pay for the cost of repairing property other than the other driver’s vehicle. The property damage portion of the insurance policy doesn’t include personal property in the other vehicle in most cases. It’s a good idea to check the policy provisions to understand exactly what is covered and what the policy exclusions are.
Choosing the Right Level of Coverage
While a driver is meeting his or her obligations by buying only the minimum level of third party car insurance coverage, it may not be the right level of protection for them. When an accident occurs in a tort state, the insurance company will pay for the damages incurred by the occupants of the other vehicle up to the policy limit through the liability policy. As a policyholder, you are responsible for paying the deductible before the insurance company will pay out any benefits under the policy.
If the amount of coverage under the policy doesn’t fully satisfy the damages incurred by the other people involved in the accident, the policyholder is required to pay them personally. Since the idea of buying car insurance is to protect your assets, a better choice is to buy as much insurance coverage as you can afford. It’s a much better option than to face having to use savings or sell assets to pay for the damages.
When the accident occurs in a no-fault car insurance state, the procedure is a bit different. The occupants of the other vehicle look to the owner’s insurance company to pay for their damages, as well as the cost of repairing the vehicle. In the case of a serious accident that meets the state threshold for serious and permanent injuries, you may be sued to recover damages. Your third party car insurance policy will pay benefits up to its policy limit, but you are still personally responsible for any amount above it. (The no-fault phrase refers specifically to medical bills and each person’s insurance pays for those injuries not matter who causes the accident.)
An accident that leaves a victim with permanent injuries will likely require a large payout for damages, and the victim may also be able to sue for pain and suffering, which will add more to the recoverable amount. By having a higher policy limit in place, you can avoid the stress that facing having to pay out on a large claim yourself will bring.
No matter what level of third party car insurance coverage you have in place, it’s a good idea to review it annually to make sure you have the right level of protection for your needs. Even if you are sure about the level of insurance you have in place, it’s a good idea to get quotes from several companies a few months before your policy is due to expire. That way, you can be sure you aren’t paying too much for your coverage. If you are ready to start looking at different options, why don’t you click on the free insurance tool on this page?
