Finance

Why Third-Party Insurance Is Ideal for Low-Mileage Drivers!

A person can buy a car for various reasons or for one. Some buy a car for daily use, some buy it in case of any kind of emergency, some buy to use it once in a while, some already have a car but want to buy another, and so forth. 

Because these are different reasons for buying a car, the usage of that car also differs. Who uses it, how many times in a month, and how for how long changes with its purpose.

Buying a car demands getting car insurance right after. Not just because car insurance is necessary but also because it is a legal obligation of every Indian citizen. There are different car insurance types in the insurance industry, so you shouldn’t have to worry about anything. 

There is comprehensive car insurance, own damage car insurance, third-party car insurance, and some more. There are many factors that determine the cost of four-wheeler insurance, like the make and model, price, fuel type, type of insurance, and mileage, to name among other factors. 

Let us understand the relationship between the mileage of the car and the car insurance cost!

Mileage and Car Insurance: The Relation

There is a direct relation between the mileage and the car insurance. Let us discuss how!

The insurance company considers the mileage you cover every year to keep a count of it and calculate the relevant numbers accordingly. The relevant numbers being, premium amount, claim amount, discount, add-ons, etc., and mileage, become essential. With an increase in mileage, the car covers the use and wear and tear increase. With that, the risk of an accident or mishap increases, too! This, in turn, increases your premium. 

With a decrease in the mileage, the risks in general reduce, decreasing the amount of your premium. Because accidents are less likely to happen, the company has a lower probability of having to pay the claim. This gives the low-mileage drivers the benefit of the doubt in the eyes of the company. Getting third-party insurance is also advised in most cases. One of the many reasons for this is the lower risk of hurting the car or the owner!

Let us see how third-party insurance works in order to understand this statement: “Third-party insurance is ideal for low-mileage drivers.”

Third-Party Insurance: The Functioning

To put it plainly, third-party insurance covers the potential financial liability to a third party in case of an accident or damage. This damage can be caused to the car or property of that third party, and hence, they are compensated financially since the accident was caused by your car.

  • Mandatory

Having third-party car insurance coverage is mandatory by law in India. You have comprehensive car insurance that covers the third-party liability as well as all the other financial compensation in case of an accident or disaster. You also have own damage insurance, which is supposed to be purchased along with the third-party insurance itself. However, third-party coverage is mandatory in India to protect the third party in case of an accident. 

  • Cost-effective

If you check third party car insurance online, you will observe that these policies are usually pocket-friendly and cost-efficient compared to comprehensive ones. This is because it only covers the third party’s liability, not yours. With insurance company logic, the higher the claim, the more the premium! Hence, with third-party insurance, you have to pay lesser premiums.

  • Good Coverage

Even though this type of insurance only covers the third party’s loss, the coverage in itself is very beneficial. It covers the bodily injuries suffered by the third party, where it pays the hospital and medical bills (on cross-checking). The third-party insurance also covers the property damage that happened due to the insured car. Along with these two, it also takes care of vehicle damage in case of a road accident and damage.

  • Personal Coverage

Even though the name suggests that the insurance only looks out for third-party losses, it also has clauses to cover personal accidents. Not all, but most insurance companies provide some coverage for your personal accidents, too. 

Summarising the Discussion

Everything that has been discussed in the blog tells us about the relationship between third-party insurance and lower-car mileage. Since it is always a goal to save money and be cost-effective, planning and choosing your policy accordingly is also essential. 

If you are a low-mileage driver, you are saving your money on fuel, maintenance, repairs, and premiums (by choosing a third-party insurance policy), so you can definitely compensate for any cost apart from the third-party liability in case of an accident. You can also customise your policy by adding beneficial riders to it, if at all necessary.

You can check all the features of third-party car insurance online and understand the functioning in detail. This will help your decision and educate you in the right direction. It is essential to make the right choice for your car, and who better than you to do it? 

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