What does third party fire and theft car insurance cover?

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Here's what you need to know...

  • This coverage is above and beyond the legally required minimums for bodily injury, liability, and property damage
  • Third party fire and theft coverage is not influenced so heavily by age or driving record
  • This coverage protects a car owner from financial loss in the event that his car is lost in a fire or stolen

Among the lesser-known insurance products available to drivers is something known as third party fire and theft car insurance. This insurance coverage goes above and beyond the legally required minimums for bodily injury, liability, and property damage.

It’s not required by law, so very few motorists carry it. However, if you have the money to spend, third party fire and theft car insurance is not a bad idea.

Before discussing this insurance, it’s important to note that all states require minimum car insurance for the previously mentioned bodily injury, liability, and property damage.

In a handful of states where purchasing insurance is not necessarily required, drivers must still produce proof of self-insurance to avoid purchasing a policy.

Regardless, all drivers in the U.S. must carry some insurance protection before owning and operating a vehicle.

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What does third party fire and theft car insurance cover?

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Third party fire and theft car insurance is broken down into three categories. The first category covers third parties and their property; third parties being those who were not directly involved in an accident.

As an example, if two cars are involved in a crash on a residential street, which results in one of the cars traveling onto a residential property, third party insurance covers any damage to the property as well as the bodily injury that might be incurred by individuals on that property.

The other two components, fire, and theft, protect a car owner from financial loss if his car is lost in a fire or stolen.

The theft component of this type of insurance will not cover damage caused to your vehicle during an unsuccessful theft attempt. It will also not cover items stolen out of your vehicle under any circumstances. Stolen items are usually covered under a homeowners policy.

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Can anyone purchase third-party fire and theft car insurance?

Since third-party fire and theft car insurance is additional type of car insurance coverage that goes above and beyond minimum requirements, anyone who purchases a policy can purchase this extra coverage.

One would be hard-pressed to find such coverage if self-insured in a state which allows it, because third-party fire and theft coverage only kicks in after the limits of your primary policy are exhausted.

For someone who is self-insured, determining those limits can sometimes be a dicey issue. Therefore, insurance carriers resist selling third-party fire and theft coverage to those who are self-insured.

With minimum car insurance coverage, the total cost of your policy depends heavily on your driving record and your age. The good news is that third party fire and theft coverage is not influenced so heavily by these factors.

And if your vehicle is equipped with anti-theft devices, you’ll be able to get the best rates possible for this extra coverage.

Is third-party fire and theft car insurance affected by the kind of car I drive?

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Because the fire and theft components of this insurance are designed to cover the cost of replacing your vehicle, the price you pay will be influenced by the car you drive. Obviously, the more expensive it is to replace your car the higher the risk of loss to the insurance company.

Third-party fire and theft car insurance on a 2010 Lamborghini would be significantly higher than the same coverage for a 2007 Volkswagen Jetta. But let’s be honest, if you can afford the 2010 Lamborghini, you can afford the extra coverage.

Car insurance companies figure the replacement value of your vehicle based on its age and condition at the time it is first being insured.

If you carry the third-party fire and theft coverage for five consecutive years, your rate will not come down even though the replacement value of your car decreases.

Writing the policy this way gives you the advantage in the early years of the policy and the insurance company the advantage in the later years. In other words, it’s a means of sharing the risk equally among insurance company and driver.

Third-party fire and theft car insurance is not a bad idea if you own a fairly expensive vehicle or have valuable assets that need to be protected. It will cost you some extra money, but it may be worth it in your case.

As always, shop around with a variety of insurance carriers to find the best rates and coverage amounts.

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