Thanks to the growing threats of an economic slump, new car sales in India slowed to a 20-year low in 2019. The SIAM (Society of Indian Automobile Manufacturers) has also stated that the market will
Thanks to the growing threats of an economic slump, new car sales in India slowed to a 20-year low in 2019. The SIAM (Society of Indian Automobile Manufacturers) has also stated that the market will take some more time to recover. In the meantime, there is a growing trade in old or used cars. If you are planning to buy an old car soon, it would be an excellent idea to buy third-party insurance for it.
Unlike the comprehensive car insurance policy , buying third-party insurance is not just an option; it is the law. These are the two broad auto insurance types in the country. Third-party insurance covers the broad basics of car ownership responsibilities. The Indian Motor Vehicles Act has been modified to include this insurance cover given the increasing costs of owning a car.
Buying third party car insurance is often a better option than opting for a comprehensive cover. The most important reasons why are mentioned below.
Who should consider buying a third-party car insurance?
When you buy a new car, it usually comes bundled with a comprehensive car insurance option. Most customers disregard it as an extra cost. However, if you are buying a used car, you can safely opt for third-party car insurance.
It makes sound economic sense. Since you are buying an old car, its effective cost has decreased with its age, even if it is just a year old. A new car with the comprehensive cover plan has an Insured Declared Value or IDV which also includes the insurance cover which you have to pay for.
A used car does not have that. With age and depreciation, its cost comes down by a significant margin. Besides, there is no point in availing a new coverage policy for a used vehicle.
Given the fast-moving nature of the used car market, you may perhaps consider upgrading to a better vehicle in the near future, which makes buying only a third-party insurance policy a superior idea.
Why consider buying a third-party car insurance policy?
There are several reasons why third party car insurance policies are the best bets. As the name mentions, such a policy will cover any damage to both third-party vehicles and persons. If your car faces an accident and another vehicle is damaged, the policy will cover all expenses payable to the owner of the damaged vehicle.
It is true that such an insurance policy will not pay for damages which your own vehicle incurs. It is one of the best-known disadvantages of this policy. However, third-party vehicle damage is no laughing matter as it can involve a serious amount of money. A third-party insurance policy will help you out with the financial implications.
Some of the other reasons why you must always opt for such a plan are:
- Third-party car insurance policies are the most inexpensive options in this category. Comprehensive plans are always more expensive and are not economical for a used car.
- Such a plan will cover any medical, legal or other charges which any third-party individual can bring against you. In case you face an accident, you may have to pay large sums as compensation for damage to life or property. The third-party insurance plan will help you tide over financial issues.
- All insurance companies offer these policies. Some organisations also call it an act-only or liability-only policy. They all mean the same thing and have the same features.
- It is legally mandatory to have a third-party insurance policy. It saves you from a total-loss scenario if you face a serious incident on the roads.
- This is a liability-only plan. Hence, you do not have to pay a large sum as premium, unlike a comprehensive policy. Given that you are using an old car, you may not be interested in spending a substantial amount on insurance. A third-party policy is the only option.
Note that such a plan will not cover any damage incurred by your vehicle due to naturally occurring incidents such as floods. Therefore, besides availing a third-party insurance policy, you must also pay attention to the safety of the car and your own self. Common sense is irreplaceable on the roads.