Motor Insurance is currently one of the most important products in different markets. There are many types of motor insurance products available throughout the world. Understanding the basic motor insurance products will help us in understanding their variants. The basic products will give us an insight into the development process of motor insurance.
A single insurance company may have different types of products dealing with different types of vehicles. There are also many off the shelf products and these products are amended to provide new products. You can get now pay later car insurance or buy many other convenient types of plans like car insurance first month free. With the availability of technology, the amendment of products has become much easier. The products may be different for corporate clients (commercial lines) and for individuals (personal lines).
Basic third party (Liability) insurance policy
Basic third party (liability) insurance is the most sought-after cover in the motor insurance market. In some places, it is referred to as “Act” only cover, as it is a statutory requirement to have the coverage. It can be issued as a standalone cover or can be clubbed with the own damage section of the cover.
If it is clubbed with its own damage section then it is also known as package cover or comprehensive coverage. Here we will try to understand the standalone cover offered by the Insurers. In most countries, this is a mandatory or compulsory cover. This cover is issued to different types of motor vehicles like motorcycles, commercial vehicles, private vehicles, etc. There may be minor changes in the coverage depending upon the type of vehicle.
The third-party covers may be branded by different names by different insurance companies but the coverage provided is similar and where the insurance is mandatory, it provides the minimum required coverage. Earlier, we have understood the concept of a third party. The purpose of the cover is to provide coverage to the insured against legal liabilities against third parties arising out of the accidents, hence the coverage is popularly known as third party insurance.
Types of third-party liability Coverage
The first and important aspect of the third-party cover is that it does not cover any losses occurring to the insured vehicle. The purpose is to cover only third-party liabilities. The policy covers the death or bodily injury, death or bodily injury cover is also referred to as simply bodily injury, caused to the third parties as a result of the use of the insured car.
It will also provide cover for the physical damage or property damage, which means any damage caused to the property belonging to the third parties. Based on the limitation of the coverage, the third-party liability (TPL) coverages are of two major types as follows:
- Combined limit or Combined single limit cover
- Split limit or Separate limit cover
1) Combined limit or Combined single limit
Under combined single limit the coverage for property damage and the death or bodily injury are clubbed or combined together. In case of a single event the payments for the damages to the third-party property, as well as payments for injury claims towards third party personal injury, would be paid out under the single limit coverage.
The limit will be exhausted either in case of a large single event or multiple events occurring in a year. In no case, the insurance company will pay the amount beyond the agreed limit. However, there are policies that will provide unlimited coverage against liabilities arising out of accidents.
2) Split limit or Separate limit
A split limit or separate limit coverage policy will provide separate limits for property damage coverage and death or bodily injury coverage. In case of an accident, the payments for the third-party property damage liability would be paid out from the sum insured section of the property damage, and payments due to bodily injuries will be paid out under the sum insured of the bodily injury coverage.
Again, there may be a further split in the sum insured based on per person and per accident basis. In some policies, the coverage under property damage may be restricted to an agreed sum assured limit, whereas the bodily injury section may have the sum assured limit or it may be unlimited.
Either way, be sure to compare multiple quotes before purchasing a policy from any company. Read enough reviews to get a good idea of the credibility and reputation of the company you have selected. Companies with excellent reviews such as Citizens Insurance can offer you the type of insurance that best suits your needs.