Third-Party Car Insurance
Seatbelts are a must-have security measure for anyone travelling in a car. You simply can’t do without them. It is more than just breaking the law; it is a risk you don't want to take. In the same way, a motor insurance policy is a necessity for all vehicle owners.
Third-Party Car Insurance is a legal requirement for every car to drive on roads under the UAE Road Transport Authority (RTA) Law.
Apart from being a legal requirement, it is also important from a financial standpoint.
Third-party insurance basically covers all expenses that arise in cases where you cause damage to any third party while driving - no matter whether it's third-party property, another person, or even another vehicle
Therefore, it is important to not only comply with the law but also to protect yourself from the financial impacts of any mishaps.
Let's discuss third-party insurance in much more detail.
What Is Third-Party Insurance?
As mentioned earlier, third-party insurance is a type of motor insurance that covers any loss or damage caused to another person or their property because of your vehicle. It covers the financial costs of repair of the property or the compensation.
Also, since UAE Road Transport Authority (RTA) Law has made third-party insurance a mandatory requirement for every vehicle owner, you will be liable for legal repercussions if you don’t possess a valid third-party cover.
For instance, Sonia has third-party insurance for her car. She was on her way to the bank when she hit another car unknowingly. Unfortunately, the driver of the other car passed away on the way to the hospital.
And, the car sustained severe damage too. Since she has third-party insurance, the insurer will provide compensation to the deceased person’s family as per the amount decided by the court. The cost of repairing the car damages shall also be taken care of by them.
Benefits Of Third-Party Insurance
Here are some reasons why third-party insurance is advantageous
As a third-party insurance policy provides limited coverage, the premium is less. Therefore, third-party policies typically have lower premiums compared to comprehensive policies.
According to UAE law, third-party insurance is mandatory. In the event that you do not have a valid insurance policy while driving your vehicle, you may face many legal consequences. Driving without insurance will result in a fine of AED 500 and black points on your driving licence, and/or your car may be confiscated for 7 days.
When you damage third-party property or cause personal injury to someone, it can be quite expensive to compensate them. Without insurance, you may have to shell out a lot of money - which could burn a hole in your pocket. However, if you have third-party insurance, the insurance company will take care of such expenses and you only have to pay a minimal amount of money out of your pocket.
What Does A Third-Party Policy Cover?
A third-party policy provides coverage for the third-party liabilities including
Third-party insurance covers damage to another party's property caused by an accident involving your vehicle. For instance, say your car hits a stall and you need to cover the costs of damages which come to around Rs 20,000. This repair cost shall be covered by the policy.
👉Accidental Bodily Injuries
The policy also covers costs associated with causing permanent disability to third-party involving your vehicle.
The insurer will provide compensation to the deceased person's family based on the amount approved by the court.
What Are The Exclusions Of Third-Party Insurance?
HExclusions are situations that your third-party insurance policy doesn't cover and won't pay for. Here are some circumstances that aren't covered by third-party insurance:
The policy will not cover bodily injury sustained by you or damages sustained by your vehicle. For instance, Johnathan was driving his car when he met with a small accident.His car sustained severe damages. However, the insurer will not cover car repair expenses as the policy doesn't cover own damages.
There is no coverage in case of theft or total loss of your vehicle. .
👉Damage Due To Natural Disasters
Accidents that have occurred, caused, resulted, or are directly or indirectly related to natural disasters such as floods, tornadoes, hurricanes, volcanoes, earthquakes, or quakes will not be covered. .
👉Driving Outside The Geographical Area
There will be no coverage if the accident occurs outside the state's borders.
Accidents caused by deliberate actions will not be covered.
Note: The above list is not exhaustive. The policy might have other exclusions as well. Therefore, be sure to read the policy wording prior to buying the policy.
How To Purchase Third-Party Car Insurance?
Here are the steps you need to follow to purchase third-party insurance -
1.Visit the insurance company's or broker's website to purchase third-party insurance.
2.Then,enter the details of your car, such as the make and model, the variant, the registration year, etc.
3.Next, check the coverage and other details provided on the website and then select the policy. .
Note: Since this is a third-party-only policy, there is no coverage for your car
4.With this policy, you have the option to choose driver and passenger cover as well. Some insurers may charge extra for these covers.
5.Some insurance companies provide roadside assistance as part of their third-party coverage, for an additional fee while others offer it at zero cost.
6.After you've decided which insurer to choose, proceed with the payment.
Documents Required For Purchasing Third-Party Insurance
These are the documents that you will need to purchase a third-party insurance policy -
👉 Emirates ID
👉 Previous insurer’s details
👉 Registration certificate
👉 Driving Licence
How Does A Third-Party Claim Work?
In order to apply for a third-party claim, you need to follow these steps -
1.First, you need to inform the policy regarding the claim. Please note that the police should be notified of all motor claims, regardless of how minor they may be.
2.Any insurer will only consider motor claims that are backed up by a police report.
The police report will contain details of the :-
"At-Fault Party" - the person who was negligent and is responsible for compensating others involved in the accident.
"not at fault party" is someone who is involved in an accident but is not responsible for it.
Detailed information about each vehicle's damages and its details.
Reason for the accident, etc.
A third-party claim can be categorised into 2 types:
👉 Third-Party Property Damage (TPPD)
👉 Third-Party Bodily Injury (TPBI)
Third-Party Property Damage (TPPD)
This type of claim arises if you damage the property of a third party. Suppose you hit another vehicle and you are at fault for the accident, then the third party may contact his insurer for processing the claim, and their insurer will begin the recovery process from your insurer, provided the third party has a comprehensive policy.
In the event the vehicle you hit does not have insurance or only has third-party coverage, they will have to visit the claims office of your insurer and process the claim with them directly.
Third-Party Bodily Injury (TPBI)
This type of claim arises if you cause an accident resulting in a third party's injury or death. The court completely handles all claims of this nature.
Following is a list of some common steps:
👉 Police will arrest the driver of the vehicle (if alive) in cases of TPBI claims involving major injuries or death. This is done to protect the recovery rights as per the Shariah Law.
👉 Additionally, there are provisions where the court accepts a "Letter of Guarantee" from the insurance company as well as the insurer's promise to represent the insured in legal proceedings to release them.
👉 The "Letter of Guarantee'' is issued by an insurance company as a guarantee of the payment of any damages or compensation awarded by a court in the case of an accident. It often serves as proof of insurance for the vehicle involved in an accident and a guarantee from the insurance company that it will pay for any damages or provide compensation awarded by the court.
👉 Although the driver is also eligible to be released, his passport and Emirates ID will be confiscated until the case is resolved and a settlement is made.
👉 When the insured is found guilty of criminal negligence that caused TP's death, the Public Prosecution Court will adjudicate the case and award Diya Money - Blood Money of AED 200,000/- along with fines and imprisonment, if appropriate.
👉 Additionally, the legal heirs of the injured or deceased third party may seek additional compensation through a civil lawsuit.
What Are The Documents Required For The Claim?
It is important to understand that the documentation requirements may vary from insurer to insurer, but the following is a common list:
A police report containing details of the accident, the parties involved, any damages or injuries caused, etc.
👉 Vehicle registration card
👉 Insurance copy
👉 Emirates ID
👉 Driving licence
👉 Photos and videos of the accident scene and damage
Any additional documents as requested by the insurance company.
What Are The Documents Required For The Claim?
Which Is Better- A Comprehensive Policy Or A Third-Party Policy?
Choosing a comprehensive policy will provide you with a wider range of coverage, as it will cover any costs that may arise due to damage caused to your vehicle in the event of an accident, theft, natural disaster, etc. The policy will also cover damages caused to a third party or their property.
Third-party coverage is good if you don't need enhanced coverage or you only need it to protect yourself from legal consequences or fines, or if you're planning to sell your old car.
Ideally, you should analyse your needs before taking out any type of insurance policy. On a general note, comprehensive coverage is always a better idea as you will be fully protected against all risks.
Now, let’s compare and contrast comprehensive policy and third-party policy to help you make a better decision.
Comprehensive policy Vs Third party policy
|Parameters||Comprehensive Car Insurance||Third-party Liability Insurance|
|Scope of Coverage||It provides financial protection to you, your car, and any involved third parties.||It covers only third-party losses or damages.|
|Customization options||You can customise the policy based on your requirements and budget. For instance, you can pick add-ons to enhance the coverage of your insurance policy.||There is no option to customise the policy.|
|Price||Compared to third-party liability insurance, it can cost you quite a bit.||The premium is comparatively lower as it only provides limited coverage.|
|Theft Cover||Covers theft.||Does not cover theft.|
We've reached the end. Now that you know why third-party insurance is important, we hope you can make a knowledgeable decision about investing in it. Aside from being lawfully required, it is also the best way to safeguard yourself against, unforeseen expenses resulting from third-party liabilities - in the event of an accident.