Sunday, 29 January 2017

Third Party or Comprehensive Motor Insurance – Which One to Buy?


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Whenever we see an accident on the road, we thank God for keeping us safe and hope we would never face such situations. But the bitter truth is that everyone prays for that and accidents still happen. So lets face the truth and always be prepared to tackle such circumstances. Here preparation includes obeying all traffic rules, taking all safety measures, and most importantly having a motor insurance policy; which can help us to fulfill our legal liabilities toward third parties and their belongings or properties (in case your vehicle hits someone) and being financially ready to bear financial burden to restore everything.
Many people do not buy vehicle insurance because they think they don’t need it. They think that they drive very carefully and take all safety measures. If you’re one of that kind person then for your kind information statistics show that in a large percentage of crashes victims do not have any fault. So here your excuse for not buying a motor insurance vanishes.
Once you realize that you should have insurance for your vehicle then eventually another instinct comes into your mind that “which one to buy – third party motor insurance or comprehensive motor insurance/Package Policy?” In this post, we will discuss which motor insurance policy would be suitable for your vehicle. This post could help you decide between liability auto insurance and package policy auto insurance. Read on to know more.
Motor insurance
Generally, you get two options in vehicles insurance; Third party and Comprehensive. As per Vehicle Motor Insurance Act, 1988, to run a vehicle on road it should have third party liability insurance to fulfill legal liabilities toward the third party in case vehicle damages someone or his property. Therefore, third party insurance is imposed by law and you cannot ignore it. On the other hand, comprehensive vehicle insurance is tailored to protect insured vehicle and its owner or driver against financial losses and it also provides all the benefits that a third party insurance policy offers but you're not obligated to buy it. Here is a brief explanation:
Comprehensive Motor Insurance Policy –
This policy is tailored to cover own damages (damage to vehicles and driver) along with all third party liabilities. Comprehensive policy or package policy is usually costlier than liability policy because it offers a bundle of benefits and protects your vehicle against almost all damages including theft. These policies also allow you add riders to them so you can insure an event of loss that is not covered. Riders are extra benefits that you can add to your policy after paying some extra money.
Those who own new or expensive vehicles, this policy is a must have thing. It is noticeable that these polices are subject to depreciation and exclusions so before opting a policy, you should read “what does you policy cover and doesn’t cover?” Insurers do not provide full compensation for the damage which means you would have to pay a percentage of amount from your own pocket so clear your doubts before buying a package policy.
If your vehicle is old and less expensive then package policy would not be a better option for you. In that case, liability only policy could be a better choice but note that liability policies only cover third party liabilities, these do not cover you and your vehicle.
Third Party Motor Insurance –
These policies are designed, as per law, to cover third party liabilities if your vehicle causes damage to third parties or damage to their property. Such policies are much cheaper than comprehensive policies.
Which one to buy?
As per above explanation, if you own a new or an expensive vehicle than you can opt comprehensive policy. Otherwise, liability only policy would be suitable for your vehicle because these policies are subject to depreciation which means old vehicles get less compensation because of wear and tear. However, you can pick a package policy if you’re unable to bear your hospital charges; in case of physical injury caused by accident.
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