The term Liability means responsibility. We all take risks every day. Every activity we do involves some kind of risk. Be it driving to work or back to home or walking in the park. Accidents can happen anytime. They come sudden and uninvited. No one can predict when can an accident happen, or how many people or who all might be involved.
Who is a Third Party? You (the owner) are the first party. The insurer is the second party. And any other person driver or passenger of another car or a pedestrian who may get involved in an accident due to your vehicle is the Third Party.
Imagine, your car causing property damage or a bodily injury to a third party. Considering your role in the accident, you may become legally liable to compensate the third party. The Third Party Liability in your car insurance protects you from such legal liabilities.
There are three different types of Car Insurance policies in South Africa.
- The Comprehensive Car Insurance,
- Limited Cover and
- Third Party Only Cover.
All the three forms types cover Third Party Liability. As the coverages under the policy increases, the premium to be paid also increases. So, a Third Party Only cover is the cheapest and Comprehensive Car Insurance will be the costliest.
If your car is a bit old and is of relatively low monetary value or if you cannot afford any other car insurance, you may go for Third Party Only cover. A wider or Comprehensive Car Insurance is required, if the loan that you had availed for purchasing the car is still not paid off already. It will be a part of the Financing Agreement, to have a Comprehensive Car Insurance to protect the financial interest of the financier. Once the loan is closed, it is up to you to decide what type of Car Insurance is your need.
Remember, a Third Party Only policy doesn’t cover the damages to your car. It will only protect your liability to a third party. In other words, a Third Party Only Car Insurance covers the properties owned by any third party, who is having the risk of your vehicle causing damage to them.
The importance of Third Party Liability Insurance in South Africa is that, irrespective of the age, condition or value of your vehicle, the loss or damage it can cause to a third party will be the same. Loss or damage to a third party can be damage to his vehicle or other property, bodily injury or even death of a third party. In case of damage to the third party’s assets the liability could be the repair or replacement cost.
But in case of bodily injury, it can be treatment cost along with compensation for his loss of earnings. In case of death of a third party, the liability may be huge, depending on the deceased person’s earnings and his age. The amount payable is the legal liability that means that court has to consider the case against you and establish your role in the accident and the liability amount that you have to pay to the third party.