Introduction (Real Problem-Based)
In Pakistan, many drivers purchase car insurance thinking it will cover all types of damages in case of an accident. However, when an accident actually occurs and they try to file a claim, they are surprised to learn that their insurance policy does not cover the damage to their own vehicle.
Instead, it only covers the damage caused to another person’s vehicle, property, or physical injury.
This usually happens because the driver had purchased Third Party Car Insurance instead of a comprehensive insurance policy.
Third party insurance is the most basic form of motor insurance available. While it does not provide protection for your own vehicle, it plays an important role in protecting you from legal and financial liabilities if you accidentally cause damage to someone else or their property while driving.
In this article, we will explain what third party car insurance coverage is, how it works in Pakistan, who should consider it, its benefits, limitations, and what factors affect the premium.
How Comprehensive Car Insurance Works
To understand third party insurance, it is important to know how comprehensive insurance differs from it.
A comprehensive car insurance policy typically covers:
- Damage to your own vehicle due to accidents
- Theft of your car
- Fire damage
- Natural disasters such as floods
- Third party liabilities
In contrast, third party car insurance only covers:
- Damage caused to another person’s vehicle
- Injury or death of a third party
- Damage to someone else’s property
If you are involved in an accident where you are legally responsible for causing damage to another person’s vehicle or property, the insurance company compensates the affected third party as per policy terms.
However, any damage to your own vehicle must be repaired at your own expense.
Who Should Buy It?
Third party car insurance may be suitable for:
- Owners of older vehicles
- Individuals looking for basic financial protection
- Drivers who use their vehicles occasionally
- Owners who want to comply with legal requirements
- People who cannot afford higher premium for comprehensive insurance
If your vehicle’s market value is low, third party insurance may be considered a cost-effective option.
Benefits
Third party car insurance offers several advantages:
Legal Protection
It helps you meet legal obligations in case of an accident involving another party.
Financial Security
It protects you from paying compensation for third party damages from your own pocket.
Affordable Premium
It is generally cheaper compared to comprehensive insurance.
Coverage for Injury
It may cover injury or death of third parties caused due to an accident.
Protection Against Property Damage
It helps compensate for damage caused to another person’s property.
Limitations
Despite its benefits, third party insurance has certain limitations:
No Coverage for Own Vehicle
Damage to your own car is not covered.
No Theft Coverage
Loss due to vehicle theft is not included.
No Natural Disaster Protection
Flood or fire damage may not be covered.
Limited Scope
Only third party liabilities are covered.
Understanding these limitations helps avoid confusion during claims.
Estimated Cost in Pakistan
Premium for third party car insurance is generally lower than comprehensive insurance.
Approximate yearly premium range:
- Small Cars: PKR 3,000 to PKR 6,000
- Sedans: PKR 5,000 to PKR 10,000
- SUVs: PKR 8,000 to PKR 15,000
Actual premium may vary depending on:
- Vehicle type
- Engine capacity
- Insurance provider
- Policy terms
Factors That Affect Premium
Insurance companies calculate premium based on:
- Vehicle make and model
- Engine capacity
- Age of vehicle
- Usage type
- Policy duration
Vehicles with higher engine capacity may attract higher premium.
Real Example Scenario
Suppose you accidentally collide with another vehicle causing damage worth PKR 100,000.
With Third Party Insurance:
Your insurer compensates the affected party according to policy terms.
Without Third Party Insurance:
You may need to pay the entire compensation amount from your own pocket.
This makes third party insurance an important financial safety net.
Tips Before Buying
Before purchasing third party car insurance:
- Understand policy coverage
- Compare premium options
- Review policy exclusions
- Check liability limits
- Read policy terms carefully
Selecting the right policy helps ensure better protection against liabilities.
FAQs
What is third party car insurance?
It covers damage caused to another person or property.
Does it cover own vehicle damage?
No, it only covers third party liabilities.
Is it affordable?
Yes, it is generally cheaper than comprehensive insurance.
Is theft covered?
No, theft is not included.
Who should buy it?
Owners seeking basic financial protection.
Conclusion
Third party car insurance provides essential protection against financial liabilities arising from accidents involving another person or property. While it does not cover damage to your own vehicle, it helps protect you from legal and compensation costs.
For drivers seeking basic and affordable coverage, third party insurance can be a practical option.
Author Bio
Ali Raza is a motor insurance content writer who focuses on simplifying insurance concepts for vehicle owners in Pakistan.
Sources / References
- Securities and Exchange Commission of Pakistan (SECP) – Insurance Consumer Information
- State Bank of Pakistan – Financial Awareness Resources
- Standard Motor Insurance Policy Documents from Insurance Providers in Pakistan
