Insurance is a broad term and many types exist.
This can lead to confusion when you’re trying to buy an insurance plan or determining what your current policy will cover in case of an accident.
One type of insurance is third party insurance, which is made compulsory by law for drivers to purchase in many areas.
If you’re found driving without a third party insurance, you can be fined or even sent to jail (if the officer is having a particularly bad day).
We’re about to discuss third party insurance and what it actually covers.
But before we get into that, you should be aware that third party insurance is the least helpful type (with regards to protection of your vehicle) and you can click here to find out more about your insurance options from NRMA.
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What does third party compulsory insurance cover?
Third party compulsory insurance is meant to cover any other road user that you might injure while driving.
You might hear different terms referring to third party insurance so it’s important to be aware of them to avoid legal consequences.
For example, in some places in Australia, it also goes by names like Transport Charge Accident and Green Slip. Figure out what it’s called in your area.
This is important because you’ll need to purchase third party compulsory insurance when you purchase a vehicle, and legal action can be taken against any driver who’s found driving without it.
It’s important to note that third party insurance does nothing to protect your vehicle and pay for your medical bills in case you get into an accident.
It’s solely meant to pay for the medical bills and other injury claims of other road users like drivers, pedestrians, and cyclists.
A third party insurance will not cover any damage to your vehicle from an accident, a natural disaster such as a fire, flood, or storm, or theft.
It will also not cover the damage you cause to another vehicle or property.
What does non-compulsory third-party property insurance cover?
A non-compulsory third party property insurance covers the damage you might cause to another person’s vehicle or property while driving.
It usually doesn’t cover bodily injury that’s caused to another road user during an accident.
It also doesn’t cover the damage to your own vehicle but certain add-ons allow you to convert a third party property insurance into what’s called Third Party Fire and Theft insurance, which covers damage to your vehicle from fire or theft in addition to the damage you might cause to another vehicle or property.
You should note that the law doesn’t require you to purchase this form of third party insurance.
You should purchase a third party property insurance if you have an old vehicle that’s not very high in value since it’s not wise to spend money on a policy to cover it.
In this case, a third party property cover would become useful if you damage a high-value vehicle or property while driving.
What’s the difference between third party compulsory insurance and comprehensive car insurance?
In contrast to third party insurance, comprehensive car insurance covers damage to your vehicle in case of an accident.
It’s also not compulsory to purchase but it’s the recommended option.
That’s because there’s a wide range of situations where your car can get damaged.
Sometimes, it wouldn’t even be your fault. For example, your car might get swept away by floods or hit by a storm or fire.
Other times, you can be a victim of reckless driving and get into an accident where the fault was not yours.
Your car might also get damaged while it’s parked and in the worst case, it might simply get stolen.
In all these cases, a third party compulsory insurance will essentially be useless.
Comprehensive car coverage, however, will save your life as it covers damage from all the situations given above.
Not only that, it will also cover the damage you might cause to another driver’s vehicle.
But you should be aware that you’ll have to pay a certain amount out of your pocket before your insurance kicks in.
This amount is called the deductible, and it’s decided at the time you purchase a policy.
How does a third party insurance claim work?
After you get into an accident where it wasn’t your fault, you can file a claim with the other driver’s insurance company to pay for your medical bills and damage to your vehicle.
This is called a third party insurance claim.
It’s always a good idea to report the accident to the police and have them file a report.
You might need this report while filing your claim.
Also, make sure to take the other driver’s insurance information such as their insurer’s name and policy number.
Finally, immediately report the accident to your own insurer as well because insurance companies determine a fault percentage in an accident and you might be found partially at fault.
Also, sometimes your insurance company can work directly with the insurer of the other driver, which is another reason to report the accident to your insurance agency!