Most times we get involved in accidents and the resultant effect of such accidents is that innocent parties and road users are seriously affected or injured. Some other times, their vehicles and other belongings sustain damages also. The provision of insurance policy that will protect the vehicle owner in the event that innocent third parties are adversely affected by their accidents is what third party liability auto insurance is all about.
MEANING OF THIRD PARTY LIABILITY AUTO INSURANCE
The third party liability auto insurance is a category of liability insurance policy that provides financial coverage to a vehicle owner in the event he is responsible for damages or injury to other parties or properties as a result of vehicular accident. Here, the policyholder is the “first party”, the insurance company is the “second party” while the others which the insurance policy is made to protect is the “third party”. The third party liability auto insurance policy is the most common type of liability insurance. As a matter of fact, the policy is compulsory in most countries of the world it not all. It is the least form of auto insurance the law requires owners of vehicles to take.
TYPES OF THIRD PARTY LIABILITY AUTO INSURANCE
There are two type of third party liability auto insurance policy and these are;
- Bodily injury liability.
- Property damage liability
Bodily Injury Liability
This is the type of auto insurance policy that arises as a result of bodily injury to persons. The level of coverage could include the cost of treatment, cost of prescription drugs, lost wages and other sort of loss or damage in connection with the accident.
Property Damage Liability
This class of auto liability insurance offers coverage for costs resulting from damages to property. It also covers loss as a result of damage to the property of third parties.
BENEFITS OF THIRD PARTY LIABILITY AUTO INSURANCE
There are a lot of benefits for buying the third party liability auto insurance and some of them includes;
To obey a legal requirement
In some jurisdictions, buying this class of insurance policy is a compulsory requirement of law. These places, it is compulsory that you must have third party auto liability insurance before you will be allowed to drive your car. In Finland for instance, to enable you to operate with your vehicle, you must have valid third party liability auto insurance.
Customer satisfaction
Sometimes vehicles are used for commercial purposes, the presence of this type of policy will provide satisfaction and peace of mind to your customers.
Provision of protection against damage to property or injuries to third parties
Protection against legal liability
It affords protection against legal liability as a result of law suits against policyholders by third parties.
Peace of mind.
Buying a third party auto insurance policy provides the policyholder with peace of mind. This level of peace of mind comes from the certainty of mind that your future is guaranteed in the circumstances where the insured perils happen to you.
Financial Stability
Third party liability auto insurance policies guarantee financial stability for a policyholder. The monies that could have been expended by a policyholder due to loss are taken care of by the insurer.
Similarly, the Insurance companies play significant roles in the stability of financial systems. This is as a result of their huge investments in the financial markets. Insurance companies broker links between the Policyholders and the banks. And as well ensure the financial stability of the homes through the insurance of their risks. Needless saying that the financial stability of the homes culminates to that of the larger economy.
Cheap
The policy is cheaper when compared to other category of auto insurance policy such as the comprehensive auto insurance policy. It also requires less documentation and paperwork since it is for a third party.
DISADVANTAGES
While insurance policy is beneficial in a lot of ways, it however still has some certain disadvantages. Some of these disadvantages include:
- The policy only offers insurance coverage for loss or damage to a third-party person or their properties only. Thus, the plan does not cover any damages or loss to the policyholder and/or their vehicles. Therefore the policyholder will have to pay out of his own pocket to cover his personal loss, damage or for medical bills.
- This policy only offers a very limited insurance coverage
Conclusion
In conclusion, it is important to note that while the third-party auto insurance policy operates to cover legal liabilities and to comply with the law as well as other damages listed above, this policy, however, does not provide any cover for the policyholder’s personal damages when an accident occurs. However, it provides for the third parties.
Consequently, it is advisable to secure a policy that provides coverage that is comprehensive and covers all parties.
Right away I am going away to do my breakfast, when having my breakfast coming again to read more news.