Everything you need to know about First Party Car Insurance
Car insurance has two sections namely third party and the own damage section. The own damage section is also referred to as the first party car insurance. With the introduction of long term Car insurance policy by the IRDA ,customer can now opt for either 1 year Own damage and 3 year Third party or 3 year Own damage and Third party. If the customer has opted for 1 year Own damage and 3 year Third party then the renewal has to be done after the expiry of 1 year own damage. In this case the renewal of first party insurance is done by the customer and hence the term first party car insurance has become famous recently.
What is first party car insurance:
The own damage section of the car insurance is known as the first party car insurance. In the insurance agreement, the person who purchases the insurance is known as the first party and the company who sells the insurance is known as the second party. The customer who pays for his car insurance is known as the first party and any claims made under the first party section are settled by the insurance company under the own damage section of the car insurance policy.
The first party car insurance is an agreement between the insured customer and the insurance company whereby the insurance company agrees to settle the damages incurred by the insured in return for a considerable amount known as premium. Under the first party car insurance, the damage to the car due to an insured peril is settled by the insurance company.
What is covered in first party:
The first party car insurance covers the loss or damage to your car due to an insured peril operating at the time of the accident. Let us understand the perils covered under the first party car insurance policy:-
- Loss or damage to the car by Fire, Explosion, Lightning or Self ignition;
- Loss or damage to the car by Burglary or House Breaking and Theft;
- Loss of damage to the car by Riot or Strike;
- Loss or damage to the car by Earthquake including fire and shock damage;
- Loss or damage to the car by Act of God perils such as Typhoon, Storm, Floods, Tempest, Inundation etc.;
- Any loss or damage to the car due to an accidental external means;
- Loss or damage to the car due to any malicious activity committed by any third party;
- Loss or damage to the car due to any terrorist activity;
- Loss or damage to the car while transporting it from one place to another through Rail, Road, Inland waterway, Lift, elevator or Air;
- Loss or damage to the car by Landslide or Rockslide.
First party car insurance premium:
The premium for the first party car insurance is decided by the car insurance companies unlike the third party premium which is decided by the IRDA, insurance governing body in India. The first party tariff for car insurance has been prescribed by the IRDA and the insurance companies are free to operate within the tariff. Here is first party car insurance tariff for different Zones and different cubic capacity of the cars.
|Age of the Car
|Not exceeding 1000cc
||Exceeding 1000cc and not exceeding 1500cc
||Not exceeding 1000cc
||Exceeding 1000cc and not exceeding 1500cc
|Not exceeding 5 years
||3.039% On IDV
||3.191% on IDV
||3.343% On IDV
||3.127% On IDV
||3.283% On IDV
||3.440% On IDV
|Exceeding 5 years but not exceeding 10 years
||3.191% ON IDV
||3.510% ON IDV
||3.283% ON IDV
||3.447% ON IDV
||3.612% ON IDV
|Exceeding 10 years
||3.267% ON IDV
||3.430% ON IDV
||3.594% ON IDV
||3.362% ON IDV
||3.529% ON IDV
||3.698% ON IDV
For example, if the age of the car is below 5 years, cubic capacity is above 1500cc, operating in A zone and the IDV of the car is Rs.10Lacs, the first party premium is calculated as 3.440% of the IDV which is
(3.440 *10, 00,000)/100 = Rs.34, 400/- excluding GST.
The car insurance companies cannot charge the first party car insurance premium above this amount for the above mentioned Age, CC and Zone of operation of the car. Due to the heavy competition in the Indian market most of the insurance companies end up charging only the half rate specified by the IRDA to match the competitor’s premium as well to be in a situation to settle the first party claims.
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