Third-party vehicle insurance policies are some of the most affordable plans that vehicle owners can sign up for. However, these policies may not be ideal for everyone as they do not offer complete coverage from potential mishaps.
We’ve previously explained the pros and cons of comprehensive car insurance to help you better understand 1st party vehicle insurance. Now, let us share the pros and cons of third-party policies, so you can make informed decisions when renewing your car or motorcycle insurance.
Advantages
- Lower Premiums: This is the biggest draw of third-party insurance. It offers significantly lower premiums compared to comprehensive policies, as it covers only liabilities incurred by third parties, not your vehicle.
- Legal Compliance: Third-party insurance is mandatory in most countries, so having it ensures you’re not facing legal trouble for driving uninsured.
- Peace of Mind: It provides financial protection against legal liability in case you cause an accident and injure someone or damage their property. This can save you from significant financial burdens and legal hassles.
- Simple Process: Purchasing and renewing third-party policies is often easier and quicker than comprehensive policies. It typically requires less paperwork and inspections.
- Suitable for Older Vehicles: For older cars with lower market value, third-party coverage may be the most cost-effective option as comprehensive coverage becomes less cost-effective with age.
Disadvantages
- No Coverage for Your Vehicle: This is the biggest limitation. Any damage to your car from an accident, theft, fire, or other covered perils under comprehensive policies will not be covered by third-party insurance.
- Limited Liability Protection: Some third-party policies have limited liability coverage amounts, which could leave you liable for exceeding those limits in a major accident.
- Higher Deductibles: Deductibles are the amount you pay out of pocket before the insurance kicks in. Some third-party policies may have higher deductibles compared to comprehensive policies.
- No Personal Injury Protection: You won’t be covered for any medical expenses you incur from an accident under a third-party policy.
- May Not Be Suitable for New Cars: For new cars with high loan balances, comprehensive coverage may be necessary as lenders often require it.
As you can see, no one policy is completely good or bad. The ideal vehicle coverage depends on individual needs and risk tolerance, so to choose your best fit always assess your driving habits, car value, and budget before choosing between third-party and comprehensive insurance.
We hope you find this sharing useful and if you do, remember to share the link with your contacts. Be sure to follow our blog for more useful information on vehicle insurance.
Bjak is one of Malaysia’s biggest insurance comparison websites, offering policies from over 10 brands. Visit Bjak today to get your free insurance quote!
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