While there is a standard legal requirement to carry car insurance in Australia, there are various coverage levels to make sure your car is fully covered with the extent that the law requires. The third-party car insurance is the least expensive type of car insurance a car owner can purchase. It is termed “Third Party” because the insurance policy does not cover the first two parties; the insured (the policyholder) and the insurer (the insurance company). Third-party car insurance meets most state minimum requirements.
What is third party car insurance?
In any typical insurance contract, there are two parties involved in it. The insured is the person who takes the insurance policy, and the insurer provides the insurance coverage. The “third party” is someone who suffers damage or injury as a result of the actions caused by the insured, which is what third party car insurance covers. This type of insurance policy differs from collision or comprehensive car insurance policies in such a way that the insured is not compensated for the loss that occurred.
Third-party car insurance pays for the damages to others caused by your car as a result of your negligent actions. In other words, it acts as a barrier between the liability of the car owner and any other person or property involved in the accident where the person driving the car is at fault. This insurance coverage applies to damages that are caused to another person or person's property, not the owner of the vehicle.
The purpose and need for third party car insurance:
Third-party car insurance is mainly structured to make an injured party “whole” as a result of a covered accident. It is quite an expensive issue to repair the damages caused to other vehicles and properties, and the medical expenses needed to treat an injured victim also costs more. In such cases, if the party responsible for the accident does not have enough insurance coverage, then the injured is left with only one choice; pursue a lawsuit against the person who caused the injury.
Third-party car insurance coverage is important for anyone who is driving a car. There is a possibility that you could cause an auto accident, even if you consider yourself as a safe driver. Not taking enough auto coverage, you are putting yourself under risk and it will result in paying hundreds of thousands of dollars to the third party.
Third-party car insurance coverage:
Third-party car insurance covers damage imposed by the policyholder on other vehicles, their passengers, and their drivers, as well as any other parties involved in the accident. However, it does not cover the policyholder, his vehicle, or his passengers.
For instance, if you drove into the back of someone else's car and cause damage to the vehicle as well as to their garden wall, then the third party insurance policy will pay to cover the cost involved in the damage and also meet any compensation payment.
However, taking a third party car insurance will not cover the following damages
a. Any damage that occurred to your car at the time of the accident.
b. Any damage occurred to you or your passengers traveling in your car at the time of an accident if you are to blame for the accident
c. If your car is destroyed by fire or stolen
Types of Third-party car insurance:
There are basically two types of third party car insurance policy; bodily injury and property damage. Bodily injury coverage will be offered to a person who is hurt as a result of an accident that you cause; property damage coverage will pay for the damage caused to another person's vehicle by your car in the accident. Almost, all territories in Australia would require people to carry both of these types of coverage, although the minimum amount required may vary.
Benefits of third party car insurance:
The key benefit of taking a third party insurance policy is the premium cost. The premium cost is always less compared to a comprehensive car insurance policy and is independent of the car value.
While there are too many vehicles on the road that are well worth insuring up to the full coverage amount, there are some vehicles that are either too damaged or too old to be worth the full cost of insuring, and in such instances, third party car insurance policy is considered the best.
Finally, there is no cap on the compensation paid to the third party injured or damaged.
How to get the best deal on your third party car insurance:
There are numerous ways to purchase a third party car insurance, but keeping the cost low while buying one is very important. Here are some tips to buy the best policy according to your requirements:
a. Shop around:
Compare various third party car insurance quotes obtained from different private insurance providers, to ensure you get a cheap deal. This will help you to purchase the right policy at the right price. Also, follow this procedure every time your policy is due for renewal.
b. Check which group your car belongs to:
The amount you pay for your third party car insurance policy partly depends on which group your car belongs to. Nevertheless, to say, the lowest group of cars will be cheaper to insure. So, before purchasing your car, it is wise to check which group your car falls in. Doing so will prevent you from big surprises when it comes to paying your insurance policy.
c. Improve your car's security system:
Lower your car insurance premium by adding more security features to your car. However, car modifications can increase your premiums, so be wary of that.
Car insurance is necessary in Australia but it is quite expensive. If you have ever been tempted to go without it to save some money, then here is a cheap alternative – third party car insurance. Though third party car insurance will not cover any of your personal damages or damages to your own car, it is essential to protect your financial assets and wellbeing.
Sandy James is a car fanatic from Brisbane, Australia.