While third-party insurance is a mandatory aspect of car ownership to meet legal requirements, it’s essential to be aware of its limitations. This insurance type, also known as ‘act-only’ insurance, has its drawbacks. Notably, it does not offer protection for your vehicle in the event of an accident that you are responsible for. It means that all repairs to your vehicle become your financial responsibility. This blog will shed light on its limitations and why it may not provide the comprehensive coverage you expect.
Disadvantages of Third-Party Insurance
Third-party insurance, while serving as a crucial component of risk management in various domains, comes with its fair share of disadvantages. Here, we will explore some of the significant disadvantages of third-party insurance, shedding light on the potential shortcomings and limitations it may impose on policyholders.
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No Protection for Your Vehicle:
One of the most significant drawbacks of third-party insurance is that it doesn’t cover the damages sustained by your vehicle in an accident, regardless of whether you are at fault. You’ll need to bear the repair costs, which can be substantial.
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Limited Coverage:
Third-party insurance primarily focuses on liability coverage for third parties involved in an accident. It doesn’t offer a range for personal injuries to the policyholder, passengers or property damage inside the insured vehicle during the accident.
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No Protection Against Theft or Natural Calamities:
This insurance type does not provide coverage in the unfortunate event of theft, natural calamities like floods, earthquakes or other unpredictable and uncontrollable mishaps that can damage your vehicle. It would be best if you had comprehensive car insurance for such protection.
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Exclusion of Add-on Covers:
Add-on covers that enhance the coverage of your insurance policy are not available with third-party insurance. Comprehensive policies offer the flexibility to select add-ons that suit your needs, providing a more tailored and complete protection package.
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No Coverage Against Own Damage (OD):
The name ‘third-party insurance’ emphasizes its limitation in failing to provide coverage against damages to your vehicle. To safeguard your vehicle financially, opting for comprehensive car insurance is essential.
Conclusion
While third-party insurance fulfils the legal requirement for car ownership and provides liability protection for third parties, it has notable drawbacks. The absence of coverage for your vehicle’s damages, limited protection against theft or natural calamities and the lack of add-on options make it less comprehensive than comprehensive car insurance. A complete car insurance policy is the most suitable choice to ensure that you are adequately covered against all potential risks and have protection for your vehicle. Understanding these limitations is crucial for informed decision-making regarding car insurance.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the relevant industry. It is advised to verify the relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information
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