Elevating Coverage: Transitioning From Third-Party To First-Party Insurance

There are two main types of car insurance: first-party insurance and third-party insurance. First-party insurance, also known as comprehensive insurance, covers the policyholder for their own losses or damages. Third-party insurance, on the other hand, covers the policyholder in case they cause losses or damages to another person or their property. In some places, vehicle owners are required by law to carry at least some third-party insurance. If you want to change your third-party insurance to first-party insurance, you can follow these steps: visit an online car insurance provider, navigate to the car insurance page, enter your car number, leave the previous policy number blank, and proceed to buy a comprehensive policy.

Understanding the difference between first-party and third-party insurance

First-party and third-party insurance are two types of car insurance policies that offer different levels of coverage and benefits to the policyholder. While the former is not mandatory, the latter is required by law in most places. Here is a detailed overview of the differences between the two.

First-Party Insurance

First-party insurance, also known as comprehensive insurance, is a policy that benefits the policyholder, i.e., the car owner. It covers losses or damages to the policyholder's vehicle and can include protection against natural calamities, man-made disasters, accidents, fire, theft, and vandalism. This type of insurance also includes third-party liability coverage, which means that if the policyholder causes damage to another person's property or vehicle, the insurance company will compensate the third party on behalf of the policyholder.

First-party insurance also provides personal accident cover to the policyholder, offering financial protection in case of disability or death caused by a car accident. Additionally, comprehensive insurance can be customised with add-ons, such as zero depreciation, engine protection, roadside assistance, etc., by paying a higher premium.

Third-Party Insurance

Third-party insurance, on the other hand, primarily covers damages incurred by a third-party person or their property. In this case, the insurance company compensates the third party for any losses or injuries caused by the policyholder's vehicle. This type of insurance is mandatory in most places and is required by law to drive a vehicle on public roads.

While first-party insurance is not mandatory, it is highly recommended to have comprehensive coverage to protect oneself financially in case of any unfortunate incidents.

Switching from Third-Party to First-Party Insurance

When it comes to switching from third-party to first-party insurance, it is usually done during the policy renewal phase. At the time of renewal, you can choose to switch to a comprehensive insurance policy, which includes both first-party and third-party coverage. The steps to switch are relatively simple and can often be done online.

However, it is important to note that the cost of a comprehensive policy will be higher due to the increased scope of coverage. When switching, it is essential to consider factors such as the cost of additional coverages, the Insured Declared Value (IDV) of your vehicle, deductibles, and the No Claim Bonus (NCB).

Comprehensive car insurance as a first-party insurance option

Comprehensive car insurance is a type of insurance that covers both third-party liabilities and damage to the insured car. It is an extensive policy that offers broader coverage than third-party insurance and is often considered a smarter choice as it provides all the benefits under a single policy.

Comprehensive insurance covers damage to the insured car due to accidents, vandalism, fire, theft, and natural disasters. It also includes third-party liabilities such as death, injury, and property damage. Additionally, it provides personal accident cover for the owner-driver in case of accidental death or disability.

Benefits of Comprehensive Insurance:

• Covers damage to your car: Comprehensive insurance protects your car from damage due to accidents, collisions, fires, etc.
• Protects against third-party liabilities: It covers losses and damages caused to third-party property, vehicles, or individuals.
• Customizable IDV: You can customise the Insured Declared Value (IDV), which is the market value of your car, affecting your premium and claim amounts.
• Add-ons for better coverage: You can enhance your coverage by adding specific add-ons, such as engine and gearbox protection, breakdown assistance, and zero depreciation cover.
• Protection during natural disasters: Comprehensive insurance covers damage to your car caused by natural disasters like floods, earthquakes, and hurricanes.
• Compensation for car theft: Comprehensive insurance compensates you in case your car is stolen.
• Breakdown assistance: This add-on provides assistance if your car breaks down and doesn't count as a claim.
• Avoid depreciation with zero depreciation cover: You can opt for zero depreciation cover to avoid depreciation on your car's parts and get more money during claims.

Exclusions in Comprehensive Insurance:

• Normal ageing and wear and tear: Comprehensive insurance does not cover damage caused by normal ageing and wear and tear of your car.
• Depreciation of the vehicle: The policy does not cover the depreciation of the car's value over time.
• Limited coverage for fibre or rubber parts: Damage to vehicle parts made of fibre or rubber may not be fully covered.
• Nuclear attack or war: The policy does not cover losses or damages due to nuclear attacks or wars.
• Driving under the influence: Claims made while driving under the influence of alcohol are typically excluded from coverage.
• Driving without a license: Claims arising from driving without a valid driver's license are generally not covered.
• Consequential damages: Damages that occur after the accident, unless covered by an add-on, are usually excluded.
• Contributory negligence: Claims may not be covered if you engage in risky behaviour, such as driving during floods.
• Add-ons not purchased: Benefits of add-ons that you haven't bought won't be included in your coverage.

Switching from Third-Party to Comprehensive Insurance:

You can switch from third-party to comprehensive insurance at the time of renewal. You can either renew with your existing insurer or choose a different insurer. However, switching during the policy term may be more difficult and could result in premium changes and additional admin fees.

First-party insurance claims process

A first-party insurance claim is made by the insured (the first party) directly with their insurance provider (the second party). This type of claim typically covers incidents affecting the policyholder or their property.

The first-party insurance claims process is relatively straightforward and often simpler and faster than a third-party claim. It usually involves the following steps:

• Notify your insurance company of the incident as soon as possible.
• Provide a detailed account of the incident and submit supporting documents such as police reports, medical records, and repair estimates.
• The insurance company will review your claim, assess the damage, and determine the compensation based on your policy coverage limits and the terms of your insurance policy.
• Receive compensation from the insurance company, which is subject to the terms of your insurance policy and your policy coverage limits.

It's important to remember that your insurance company will not pay for any event not covered in your policy (usually referred to as "exclusions"). Common exclusions include injuries resulting from intentional or reckless acts, or from extraordinary sources like nuclear radiation.

Additionally, the amount of compensation you receive may be influenced by factors such as whether you are partially at fault for the incident, and whether your insurance policy includes comprehensive and collision coverage.

Third-party insurance claims process

A third-party insurance claim is filed by someone other than the policyholder or insurance company. If you are in a car accident caused by another driver, you can file a third-party claim with the other driver's insurance company. This is to cover your accident-related expenses, such as vehicle repairs, medical bills, rental cars, and lost wages.

• Gather information at the scene: Exchange personal details and contact information with the other driver(s). You will need their name, phone number, license and registration information, vehicle information, and auto insurance information. Take photos of the accident scene and any vehicle damage. If a police officer does not arrive at the scene, consider filing an accident report with the local police department.
• Contact your insurance company: Get in touch with your insurance provider as soon as possible, even if you were not at fault. They can work with the other driver's insurance company on your behalf and help you file a third-party claim.
• File a third-party claim: You can file a third-party claim directly with the at-fault driver's insurance company or through your own insurance company, which can guide you through the process. You will need the at-fault driver's name, auto insurance policy number, phone number, and details about the accident.
• Work with a claims adjuster: The other driver's insurance company may assign an adjuster to investigate the accident, determine fault, and estimate repair costs. Cooperate with the adjuster, but remember that you are not obligated to accept an unacceptable settlement offer.
• Receive your settlement or dispute the offer: If your claim is successful, you will receive a payout from the at-fault driver's insurance company. If your claim is denied or the settlement is too low, you can dispute the decision or try to negotiate a different offer.

Add-on covers for first-party insurance

Add-on covers are additional coverage benefits that enhance the protection of the insured car. These add-ons are available at an extra premium, enhancing the coverage benefits for damages that are excluded from a basic car insurance policy.

• Zero Depreciation Cover: This cover helps the policyholder mitigate the burden of bearing the depreciation cost of their vehicle, increasing the claim amount.
• Engine Protection Cover: This cover provides coverage for any loss or damage caused to the engine due to issues such as water ingression or oil spill.
• No Claim Bonus Protection Cover: This cover protects the No Claim Bonus (NCB) of a car owner even if they raise a claim, helping to reduce premiums.
• Roadside Assistance Cover: This cover provides on-road assistance services, such as towing, fuel delivery, and minor repairs, if the insured car breaks down.
• Return to Invoice Cover: This cover ensures that the policyholder receives the invoice value of the car as the claim amount in the event of a total loss, constructive total loss, or theft.
• Daily Allowance Cover: This cover provides a travel allowance to cover daily travel expenses if the insured car is being repaired.
• Passenger Cover: This cover provides compensation for any medical expenses incurred by passengers in the insured car in case of an accident, including hospitalization, treatment, and ambulance fees.
• Consumable Cover: This cover reimburses the expenses incurred towards consumable items used in the insured car during repairs, such as nuts, bolts, lubricants, grease, washers, engine oil, etc.
• Tyre Protect: This cover reimburses expenses incurred towards repairing or replacing the tyres of the insured car, including puncture, in-tyre bulge, tyre cut, or bursting.
• Key Replacement Cover: This cover provides coverage for expenses arising from replacing the keys of the insured car if they are lost, stolen, or damaged.
• Loss of Personal Belongings Cover: This cover compensates for the loss or damage of any personal items stolen from or within the insured car, including electronic equipment.

Frequently asked questions