Third-Party

Just like with traditional car insurance, your rates will vary based on a number of factors, including what coverage level you choose and your driving history.

The very nature of third-party car insurance means that you will save money since you are only choosing liability coverage. Alternatives to liability-only coverage include collision, comprehensive, personal injury protection, and uninsured motorist coverages.

What are the requirements to get third-party auto insurance?

There are no significant differences in requirements to sign up for third-party insurance. Just like with traditional car insurance, you will have to provide your information, your vehicle information, and information for any additional drivers. Your rates will be based on the same factors as regular auto insurance, such as age, gender, and where you live.

Also, if you are planning on driving for a ride-share company, you may have to have more advanced insurance (although this varies among providers). Certainly, it is advisable if you have plans to transport passengers, due mainly to potential medical costs in the case of an accident for which you are deemed at fault.

Is auto insurance a legal requirement?

Naturally, the first thing to consider is what the legal requirement is for insurance. As mentioned above, financed vehicles and ride-share companies may have some requirements for you to have additional insurance. However, you should also check what each state requires as its minimum levels of coverage.

New Hampshire is the only U.S. state that does not require you to buy car insurance in order to drive, although it does demand that you are financially responsible enough to compensate those whom you injure and repair any damage.

Will third-party auto insurance save you money?

Having third-party liability insurance is far cheaper than having any other form of insurance, such as collision or comprehensive. According to the National Association of Insurance Commissioners, the average savings of someone taking out third-party online insurance versus more comprehensive coverage is 50 percent or an average of $500 per year.

Of course, the low rates stem from a reduced amount of coverage, meaning that your insurer will pay fewer claims. However, if you’re looking purely at the cost, then taking out third-party-only is the best way to lower your auto insurance rates.

Take a look at this table to see the average cost to buy liability auto insurance coverage in each state, along with the minimum requirements in each state, as described by the Insurance Information Institute.

Minimum Liability Auto Insurance Requirements and Average Rates by State

Read more:

• Buy Cheap Delaware Auto Insurance
• Buy Cheap Hawaii Auto Insurance
• Buy Cheap Idaho Auto Insurance
• Buy Cheap Iowa Auto Insurance
• Buy Cheap Kentucky Auto Insurance

To help clarify the acronyms and abbreviations in the table, we’ve defined them below.

Minimum Liability Coverage Acronyms and Abbreviations

Make sure you meet at least the minimum requirements for auto insurance in your state to avoid penalties.

Does the type of car you drive affect your third-party auto insurance rates?

If you have a cheaper car, then having third-party only insurance may actually make financial sense. As a rule, look up the value of your car using an online service (it’s advised that you do this across at least two sites so that you have a range of options).

If the annual rate for comprehensive and collision insurance comes to more than 10 percent of the total value of the vehicle (if you were to sell it tomorrow) then you should only get third-party insurance. It’s simply not worth the added cost if you are not likely to require a major claim.

If you drive an older or a cheaper car and have savings that you could use to replace the vehicle with little financial burden, then third-party insurance may be a solid choice.

Will third-party auto insurance cover your car if it is totaled or stolen?

You may wonder what to do if your car is stolen or totaled. If you have full coverage auto insurance (i.e. comprehensive and collision) and your car is totaled or stolen, car insurance companies will pay out the full value of the car, which can allow you to pay off any loans, or buy a new car.

If you carry third-party liability insurance only, or have added collision and not comprehensive, theft will not be covered.

However, if your car has little financial value, the need for a full refund may not be worth the additional monthly payments. Think about what you would do if you lost your car suddenly – depending on how desperate your situation would be, you should consider whether you need the full insurance package.

Read more: 10 Most Stolen Vehicles in America

Will raising your deductible save you money on auto insurance?

If you have a solid driving history, with few or no accidents, then you could raise your auto insurance deductible by $1,000, remove collision coverage, and put the amount saved in a savings account for use if you have an accident.

The amount your rate will decrease by will, after a few years of doing this, normally be enough to buy a second-hand car that will keep you on the road if your car is totaled. If you’re an above-average driver (i.e. have had no claims in the past five years), you should consider this to be a viable option.

Are passengers covered with third-party auto insurance?

If you regularly travel with passengers, then you should give serious consideration to buying more auto insurance than just basic third-party. In the event of motor vehicle crashes, sometimes the most basic third-party coverage will not cover injury to your passengers.

This, more than the cost of property damage, is the biggest expense occurring as a result of a crash – often costing three times as much as the cost of repairs to a car.

Will you need to have savings if you get third-party auto insurance?

One of the biggest determinants of whether you should select a third-party insurance policy is whether you can afford a catastrophic incident financially. This is counter-intuitive, since cutting insurance saves money.

However, what you’re effectively cutting is the payout you would get or even owe if you were to have an accident. If you have saved up the value of your car, and would not be financially damaged too greatly by having to replace your car, then third-party insurance should be sufficient, particularly if you have a strong driving record.

You should think extremely carefully about your insurance policy before you decide to reduce it down to third-party only. There are auto insurance discounts available that can help save you money.

Although it may seem like you are saving money (and you certainly are in the short-term), the potential costs of an average $15,000 medical claim or costly damage to personal vehicles will soon eliminate any concept of money saved.

Counter-intuitively, reducing your coverage may be a better option if you are in a more stable financial position, and can afford to bear the out-of-pocket costs that would be paid by a claim. Third-party insurance is money saved — but at what cost?

How do third-party auto insurance claims work?

If insurance customers are in an accident, it is best to make sure you take pictures and try to remember as many details as possible. You could write these down along with the contact information, driver’s license number, vehicle registration, and insurance information for the other driver. You may also want to call the police and take down the officer’s name and badge number, as well as ask how to obtain a copy of the police report.

When a third-party must make a claim against you, they will go directly to your insurance company. Generally, the insurance company is able to handle everything and make a settlement on your behalf. However, it is best to contact your own insurance company right after an accident, regardless of who is at fault.

If damages or injuries exceed your insurance limits, the insurance company may also contact you to pay your out-of-pocket expenses.

If the situation is in reverse, and you were in an accident due to someone else’s fault, you must make a claim to their insurance company. If they do not have insurance (or not enough insurance), you may need to sue them for damages. However, if you have uninsured/underinsured motorist insurance, this should cover your expenses in place of the other party’s insurance.

When you make a claim against another driver, an insurance adjuster will want to see the details of the accident to determine who is at fault. If they determine that their insured is at-fault, they may send a check covering your damages to the repair shop or they may send you a reimbursement check.

You may want to seek out estimates from repair shops. While the insurance company may recommend that you use an in-network repair shop, you do not need to use them. However, you should ask about the procedure with each shop to see which is easiest or the best decision for you.

In states where you can buy no-fault auto insurance coverage, you would contact your own insurance company to pay for medical expenses. However, in states without no-fault insurance, you would file a claim with the at-fault driver’s insurance company, which will pay your medical expenses up to the driver’s insurance limit. Any excess will need to be paid out of your pocket or covered by your uninsured/underinsured or medical payments insurance coverage.

If the at-fault driver’s insurance coverage doesn’t cover the cost of property damage, you will either need to pay the rest out of pocket or have it covered by your own uninsured/underinsured driver’s or collision insurance coverage. There is when buying uninsured motorist coverage is helpful.

How do you get third-party car insurance online? It’s best to comparison shop, and when you shop for policies online, third-party insurance is often the cheapest (and certainly the simplest) option you will be quoted by your insurance company. Adding on other more all-encompassing forms of insurance will cause your premiums to go up, but will cover you in more situations.

When you’re looking at how to check third party car insurance costs, take a moment to use your ZIP code and get third-party automobile insurance quotes that you can use to buy third party car insurance online or through an insurance agent, as well as other forms of coverage, should you decide third-party coverage is not sufficient.