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Ins and Outs of Third-party Insurance
Tuesday, 08 September 2009 11:12
The great thing about insurance is that panders to our need to shift blame. By apportioning the blame, insurance companies evenly allocate the financial burden. When it becomes your turn to fess up, you’ll want to make sure that whatever liability you are allotted, it's limited.

Third-party insurance protects you, the first party to an insurance policy, from any claims made by a third-party. This third-party claims for damages that have been assigned to you by both insurance companies. If the damage done to someone else’s car is your fault, your insurer will cover this amount, if you have third-party insurance.

If you do not have comprehensive cover or limited liability insurance, you should get third-party cover. Whether you have this cover or not, you will be liable for the damages, and unlike a well-funded insurance company, you might not have that R500,000 expense account for broken BMWs.

More than paying for someone else’s car, third-party insurance also grants you the facilities of your insurer’s legal department. If you are in an accident and the third-party unfairly blames you, you’ll need lawyers to get the money out of the other insurer. Third-party claims can do this. Note, your insurer does not cover you for damages to your vehicles, even if the accident was not your fault. You will have to reclaim this amount from the other guy’s insurance company.

Moreover, if you claim for an accident with your insurer and the accident was not your fault, your insurance company can claim the excess amount back the third-party. The grudge is then on the other guy and not you, for your insurance company.
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