How avoiding third party car insurance could lead to financial disaster
JOHANNESBURG - For many South Africans, the phrase ‘third party’ could refer to that Sunday afternoon braai that follows two hectic nights out. When it comes to insurance, however, third party cover could be the difference between life as normal and financial disaster, experts warn.
Simply put, third party liability insurance protects you against claims for any losses or damages sustained by another party in an accident that you’re involved in. But, it’s important to understand that it doesn’t cover your losses at all.
King Price Insurance client experience partner, Wynand van Vuuren, says that third party liability cover is automatically included with most comprehensive car insurance products, and that’s why they’re called ‘comprehensive’. You’re covered for everything. However, when third party liability insurance is offered as a stand-alone product, it’s particularly popular with owners of paid-off, low-value, older cars, and with people who can’t afford comprehensive insurance.
Here’s why it’s a good idea to have third party cover for your car
So far this year, despite hugely reduced claim volumes due to lockdown restrictions, King Price has paid around 1300 liability claims. The average amount per claim is over R23 000. Could you afford to pay that amount if a third party claimed against you directly?
Why’s it called third-party insurance?
In any insurance claim, you’re the first party. Your insurer is the second, and the third party is the other person, or people, involved in the incident.
What does it entail?
Third party insurance deals specifically with property loss and damage sustained by others, that you’re legally liable for. It doesn’t include repairs to your car, even if these were caused by the negligence of another party. As a result, this kind of insurance tends to be the most inexpensive product on offer.
Is third-party insurance included in comprehensive cover?
If you’ve taken out comprehensive car insurance, third party cover is generally included in the policy, but you should probably check this with your insurer.
When would you choose third party insurance?
Having comprehensive car insurance is always first prize, says Van Vuuren. However, there are a few situations where liability-only cover may be preferable:
* If your car has been paid off in full and maintenance becomes its only expense. (You should also consider stand-alone warranty cover here.)
* When your car reaches a certain age or has a relatively low monetary value.
* If you’re not insured, but plan to drive beyond South Africa’s borders. Countries like Zimbabwe, Namibia and Lesotho require foreigners to have third party insurance.
* When you simply can’t afford any other car insurance cover.
“Always remember that a little cover is still way better than none,” says Van Vuuren. “Having third party liability insurance is the best way to protect yourself from personally having to pay claims brought against you by other people.”