WHAT ARE THE DIFFERENCES BETWEEN 1ST PARTY INSURANCE AND 3RD PARTY INSURANCE: MOTOR INSURANCE BUYING TIPS

Before we look forward to the motor insurance buying tips, let us read how a motor insurance policy protects the owner of the insured vehicle from financial losses caused by an accident or other damages. Motor insurance covers the policyholder in the event that the insured vehicle suffers financial losses as a result of an accident or other damage. A comprehensive car insurance policy compensates for personal losses as well as damages to third parties and their property.

Is Motor Insurance necessary?

Yes, you’re right. According to Section 146 of the Motor Vehicles Act, 1988, you must have motor insurance before operating your car on the road. If you don’t want to buy a full insurance policy, third-party coverage is the bare least you’ll need to get your vehicle up and running.

What does the policy cover?

With motor insurance coverage, you’ll usually be insured for the following:

  • Earthquakes, floods, fires, lightning, landslides, hurricanes, and other natural catastrophes inflict damage and losses.
  • Burglary, theft, riots, strikes, or any other ill-intentioned activity are examples of damages produced by human action.
  • Third-party legal duties stemming from third-party property damage (including bodily harm and death) and financial losses.

Where does the money go?

Vehicles are usually insured for a specific Insured Declared Value (IDV). In other words, IDV represents your vehicle’s current market value. A new vehicle’s IDV is higher, but it depreciates with time.

Affective factors on motor insurance buying tips:

  • Coverage type: In comparison to its third-party counterpart, a comprehensive insurance policy that covers both the insured vehicle and a third party would have higher premiums.
  • Place of residence
  • Safety features that have been installed
  • Associated alterations
  • Bonus with no claim

MOTOR INSURANCE BUYING TIPS

Insurance companies cover two crucial elements, depending on the level of coverage.

Third-party coverage

This safeguards you from third-party claims.

First-party cover

In an insurance policy, the policyholder is the first party. This category includes two different styles of covers:

  • Damage to the Insured’s Property:
  • Damage to your vehicle caused by an accident, natural disaster, or some man-made events such as theft is covered under this section of your insurance. Comprehensive insurance coverage, which is offered as an add-on, protects this.

Personal Accident Cover

This part of the policy covers the policyholder’s bodily injury or death as a result of an accident. It’s a legal requirement. While there are many different types of auto insurance policies that cover different aspects, the claim process for each differs.

FIRST-PARTY CLAIMS

The policyholder or his or her nominee can submit the first-party claim if the policyholder becomes totally incapacitated or dies. To file a claim, complete the following steps:

  • Notify the insurance company of the collision.
  • Get a copy of the accident report from the police station in your area. Submit any documents and evidence requested by the insurance company in the event of the policyholder’s death or partial/total disability.
  • You must take your vehicle to an authorized workshop if you have a vehicle damage claim.

After reviewing the information, the insurance company will decide whether to approve or refuse your claim. The insurance provider must authorize the claim in line with the policy’s coverages since the first party, or the policyholder has a contract with the insurance company or the second party.

WHAT IS THIRD-PARTY COVER?

The third-party insurance coverage covers you against any damage caused by a third party, whether it’s to a person or property. It covers third-party damages up to Rs 7.5 lakh. It protects you against a wide range of third-party losses, including the following:

  • Third-party property, such as a car, a motorcycle, or any other thing, is damaged.
  • Death and Disability: If your car causes a person’s death or partial/complete disability, the insurance company is required by law to reimburse the third party.
  • Medical Treatment – It pays for any medical expenses incurred as a result of an accident caused by your car.

Judicial tribunals assess the scope of coverage based on the severity of the injury. The policyholder or first-party is responsible for covering the cost of the damages if the damage exceeds Rs 7.5 lakhs.

FILING OF A THIRD-PARTY CLAIM

  • The claimant, in this case, is a third party. To file a claim, obtain a copy of the FIR from the local police station.
  • MACT is a one-of-a-kind court where you can file a lawsuit (Motor Accident Claims Tribunal). The claimant has the option of choosing between the MACT in where the accident occurred and the MACT in which he or she lives.
  • The court evaluates the degree of the damage after hearing both sides’ arguments (third-party and insurance company). Remember that the court can rule in favor of either the claimant (third party) or the defendant (insurance company).

THE DISTINCTION BETWEEN FIRST-PARTY AND THIRD-PARTY CLAIMANTS

Both claims are diametrically opposed to one another.

  • The Claimant: The parties involved in submitting the claim are the most important difference. While the policyholder is the primary claimant in first-party claims, the primary claimant in third-party claims is a third party. As a result, the burden for filing a claim shifts between the two coverage.
  • The Claims Process: The MACT (Motor Accident Claims Tribunal) Court handles third-party coverage claims, while the insurance provider handles first-party coverage claims.
  • Fiduciary Duty: In first-party claims, the insurance company has a moral obligation to provide coverage in line with the policy conditions because the policyholder has entered into a contract with the company. In the case of third-party insurance, the insurer is not responsible for the third-party claims and may choose to contest them.

While first-party and third-party claims differ in a number of ways, motor insurance buying tips protect both the insured and the third party in the event of an accident. Understanding how the claim process works will assist you in determining the best strategy for reaching a fair settlement. Motor insurance gives you peace of mind by ensuring that you will be financially compensated if your vehicle is damaged in an accident.

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