Kathmandu. The Vehicle and Transport Management Act, 2075 BS has made third party liability insurance mandatory for motor vehicles. Third party insurance provides protection against financial liability arising from damage, injury or death of a third party due to a vehicle accident.
Third party insurance does not cover the risk of damage to the vehicle owner or the insured vehicle itself. Comprehensive insurance is another option under motor insurance. It is a broad insurance. This includes not only third-party liability but also all damages to the insured or his own vehicle due to theft, natural disasters and personal accidents.
Benefits of Third Party Insurance
1. Compliance with the law: Third-party insurance is mandatory under the mandatory provisions of the Transport Management Act.
2. Cost-effective: Third party insurance policies are less expensive than comprehensive insurance.
3. Coverage for Third Party Liabilities: It ensures financial liability to another person for injury, death or damage to his or her property due to their vehicle.
Disadvantages of Third Party Insurance
1. No compensation for own damage: This insurance does not provide any compensation for repairs to your own vehicle if you are injured or if you cause damage to your own vehicle.
2. No additional benefits: You cannot add additional benefits to third party insurance, as you would with a comprehensive insurance policy.
3. Limited Protection: It does not cover damage due to natural disasters, theft or personal accidents.
##Benefits of Comprehensive Insurance
1. Personal Accident Insurance: This vehicle insurance provides compensation for injuries to the driver or death of the car owner in an accident.
2. Vehicle Damage: Comprehensive insurance covers damage to your vehicle during accidents, theft, fire, flood and natural or man-made disasters.
3.Third Party Liability Insurance: It helps in completing the legal formalities for bearing third party risks.
4.Additional Features: In this insurance policy, there is an option to include additional features like zero depreciation, garage parking compensation, driver’s daily allowance, new vehicle reimbursement, engine protection.
##Comprehensive Insurance Disadvantages
1. Expensive insurance premium: Its insurance premium is more than twice as expensive as third party insurance.
2. Not legally mandatory: This insurance is not legally mandatory. It depends on the vehicle owner’s discretion.
Which one to choose?
The decision between third party and comprehensive insurance depends on your needs and the size of the budget you can spend on insurance. Third party insurance only provides compensation for losses or damages caused to third parties, protecting you from legal hassles. However, it does not provide compensation if the vehicle owner or driver himself is injured or the motor vehicle itself is damaged. Comprehensive insurance covers many risks, including theft or natural disasters, third-party liability, and damage to your vehicle.
Despite the higher premium rates, comprehensive insurance can provide peace of mind if you drive in high-risk areas or drive an expensive vehicle, such as parking in public. Third-party insurance is ideal for older cars or those with limited income sources who are at risk of theft or damage to their vehicle. Consider your driving style, car value, and financial situation to make an informed choice that balances cost and coverage.
Driving without valid third-party insurance is illegal and can result in fines or even imprisonment. Comprehensive insurance is optional. Compulsory third party insurance only benefits third parties and does not cover any risk for your vehicle or personal injury.
The Nepal Insurance Authority sets the premium rates for third party insurance. It sets the rates that are suitable for all vehicle owners.
