Introduction

Car insurance often appears complicated, with technical jargon and complex terms. Many feel the need for expert guidance to navigate insurance complexities, whether it's for life, health, or vehicles. A common confusion lies in differentiating first-party and third-party car insurance. Fortunately, internet resources and smartphone access are simplifying these concepts.

Simplifying Car Insurance in 2024

In today's digital age, understanding car insurance is easier thanks to user-friendly online processes. You can insure your car in minutes via sites like acko.com. Yet, grasping basic terms remains crucial. This article clarifies two key concepts in car insurance: first-party and third-party coverage, and their implications.

Types of Parties Involved in Car Insurance

Car insurance contracts involve two main parties and may affect a third. Here's a breakdown:

• First Party: You, the car owner, who buys the insurance policy. In the insurance contract, you are the first party.
• Second Party: The insurance company from whom you purchase the policy. This company accepts premiums and promises to cover specified car damages per policy terms.
• Third Party: Any individual or entity, aside from the first and second parties. This could include pedestrians, other drivers, or affected property. If your car causes damage to a third party, the insurance company (second party) assumes the liabilities on your behalf.

First Party in Car Insurance

As the first party, you initiate the purchase of a car insurance policy. This is easily done online by visiting the company’s website.

What is First Party Insurance?

Known also as comprehensive car insurance, first-party insurance benefits the car owner. It includes third-party liability, own damage cover, and personal accident cover, with options to add extra coverages.

Own Damage Cover: A crucial part of first-party insurance, covering damages to your car from fire, vandalism, flooding, theft, etc. Although more expensive than basic third-party insurance, it offers extensive coverage.

Difference Between First Party (FP) and Third Party (TP) in Car Insurance

Here's a detailed comparison:

Meaning:

• First Party (FP): The car owner purchasing the policy.
• Third Party (TP): Individuals or entities affected by the insured vehicle, aside from the car owner and insurance company.

Scope:

• First Party (FP): Anyone owning a car and insuring it.
• Third Party (TP): Anyone injured by the insured vehicle or whose property is damaged by it.

Insurance:

• First Party (FP): Can purchase third-party liability cover or a comprehensive car insurance policy.
• Third Party (TP): May proactively secure themselves with accident or health insurance, though their injuries/damage are covered by the first party’s insurance.

Compulsion:

• First Party (FP): Legally required to insure their vehicle with at least third-party liability cover to avoid penalties, per the Motor Vehicles Act.
• Third Party (TP): No legal obligation to buy an insurance policy.

Accident Cover:

• First Party (FP): Receives personal accident cover, typically bundled with third-party liability policy.
• Third Party (TP): Can be compensated based on the damage extent and the Motor Accident Claims Tribunal's decision.

First-party Car Insurance

With the first-party insurance concept clear, let’s explore its various aspects.

Types of Plans:

• Basic Plan: Includes third-party liability coverage, where premiums are regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
• Comprehensive Plan: Offers both third-party and own damage cover. Add-ons like zero depreciation, return to invoice, and roadside assistance can be added for an extra premium.

Coverage of First-party Insurance:

What’s Covered:

• Personal accident cover and third-party liability.
• Own damage from fire, flooding, vandalism, theft, etc.
• Specific add-ons for enhanced protection.

What’s Not Covered:

• Claims excluded by the policy or during policy expiration.
• Incidents involving driving under influence or without a valid license.
• Using the vehicle for commercial purposes or illegal activities.

First-Party Insurance Claim Process

To file a first-party claim, inform the insurance company about the incident. They will guide you through necessary documentation and claim processing steps.

How to Buy First-party (Comprehensive) Car Insurance from Acko:

1. Visit acko.com.
2. Select ‘Car’ from the menu.
3. Enter your vehicle details.
4. Provide necessary details like the car’s purchase year.
5. Choose a suitable plan.
6. Make the payment.
7. Download the policy once payment is processed.

Third-party Insurance

Third-party insurance is compulsory for driving on public roads in India. It covers liabilities from injuries or damages to third parties by the insured vehicle. While cheaper than comprehensive insurance, it offers limited coverage.

Third-party Car Insurance Claim

For example, if your car hits a pedestrian, causing injury, the pedestrian (third party) can file a claim against you (first party). The insurance company (second party) covers liabilities per policy terms. These claims, managed by the Motor Accidents Claim Tribunal, can be lengthy due to high case volumes.

Conclusion

Understanding the differences between first-party and third-party car insurance is essential for vehicle owners. First-party insurance provides comprehensive coverage, including own damage and personal accident cover, offering more extensive benefits. Third-party insurance, while legally mandated, offers limited protection, focusing on liabilities to others. By staying informed about these insurance types, you can make informed decisions and ensure adequate protection for yourself and others on the road.