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When Should You Buy A Third-Party-Only Cover?

When Should You Buy A Third-Party-Only Cover?

May 18, 2023

Driving a car without insurance is like going on a rollercoaster ride without a safety belt – it is risky and potentially disastrous. In the UAE, it is mandatory to have at least a third-party insurance policy to drive a car.

While a third-party insurance policy is the most affordable option, it may not always be the best choice for everyone. Depending on your driving habits, the type of car you drive, and your financial situation, the insurance policy that may be right for you can also differ. In this article, we'll delve into the details of third-party-only insurance and when it makes sense to opt for it.

Let’s Understand The Types Of Car Insurance In The UAE

There are two types of car insurance policies in the UAE - Comprehensive and Third-Party Liability Only.

1️⃣Comprehensive Policy
A comprehensive car insurance policy covers not only you and your vehicle but also provides financial security for any damages caused to a third party or their property in the event of an accident. Whether it's a minor fender bender or a major collision, a comprehensive car insurance policy can cover all unexpected expenses that might happen on the road.

This policy provides coverage for various scenarios that may lead to damages to your car, property, or third-party property, like:

➔Accidents, collisions, turnovers, and other incidents that may result in potential damage to your car.

➔Damage caused by external factors such as fire, explosion, spontaneous combustion, or lightning.

➔Theft or robbery of your car.

➔Willful damage caused by a third party to your car or property.

➔Damages that may occur during the transportation of goods on land, inland waterways, elevators, or lifting machinery. This also includes loading and unloading processes related to these modes of transportation.

➔Damages or injuries that may be caused to a third party or their properties

2️⃣Third-party Liability Only
This policy provides third-party coverage only, which means that it covers damages caused to a third party or their property. It does not cover damages caused to you or your vehicle in the event of an accident.

With a third-party policy, you will be financially protected against two potential scenarios. They are –

➔If you get involved in an accident that results in the death or permanent disability of another person, including passengers in motor vehicles.

➔If you cause any damage to another person’s property, the policy will also cover the costs of repairs or replacement.

While a comprehensive policy provides a wide range of coverage for you and any third party involved in an accident, a third-party policy offers coverage only for third-party damages and injuries. And also, a third-party policy is the basic legally mandated coverage that you need to buy.

But is it always necessary to buy a comprehensive policy? When should you consider purchasing only a third-party policy?

When is a Third-Party-Only Cover Good Enough?

A third-party policy may be a good option if you want to adhere to legal requirements while being on a budget. A third-party policy can be a good fit for you if – Add one more reason being the age of the car. The insurers generally allow Comprehensive only upto 7 years and now extended upto 10yrs from the date of first registration. Please include this as well.

1️⃣Your Car is Old
Cars that have been in use for a long time are more likely to experience mechanical issues. In the UAE, privately owned cars over 3 years old require an annual fitness test. Failing the test means you cannot renew your registration or drive the vehicle. Hence it is recommended to choose third-party insurance for an older car, as it may be cheaper and also useful if you decide to scrap the car.

For example, Akshara has been driving her car for over 10 years and she noticed that her car has some mechanical issues. Though she knew that repairs were due, she was worried about the cost. She has also been considering changing her car insurance policy to save money. After researching her options, she decides to switch to a third-party insurance policy, because her car was old and no longer worth a lot of money. money.

After researching her options, she decides to switch to a third-party insurance policy, because her car was old and no longer worth a lot of money.

2️⃣If You Use Your Car Rarely
If you don't drive your car frequently and the vehicle is mostly parked, third-party insurance may be a better choice for you. Since you don't use your car often, the risk of you causing an accident is lower, which means you need not pay more for comprehensive cover - which is more expensive.

3️⃣If You are Planning to Sell Your Car
If you're considering selling your car in the future, it is recommended that you have a third-party insurance policy rather than a comprehensive one. Comprehensive policies are heavier on the pocket and you would not need such coverage if you won't own the car anymore.

For example, Ramesh has been considering selling his car for a while now. He has already found a potential buyer. However, before finalising the deal, Ramesh needed to renew his car insurance policy. Since he was planning on selling the car soon, he decided to opt for a third-party-only cover, which would be cheaper than a comprehensive cover. Meanwhile, he could also be assured that the third-party damages and injuries would be covered under the policy if something unexpected happens.

4️⃣If You Want to Save Premiums

Opting for third-party-only car insurance can be a good way to save money on premiums. With lower premiums than comprehensive policies, it is a great option for those looking to cut costs. If you are a confident driver with a good track record, a third-party-only policy could be the right choice.

To Conclude
A third-party-only cover is an excellent option for those who want to meet legal requirements for car insurance cost-efficiently. If you are a confident driver, don’t use your car often, or plan to sell it in the near future, a third-party-only policy can save you money on premiums. However, it is recommended that you weigh the potential risks against the cost savings before deciding on this type of policy. Ultimately, the right insurance coverage for you will depend on your needs and travel requirements.

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