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Third Party Insurance

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What is third party car insurance?

Third Party Definition

Third party car insurance is a type of cover that protects you financially if you cause damage to someone else's property or injure someone with your vehicle. It doesn't cover the damage to your own car or any injuries you might sustain.

Why would someone need third party insurance?

Starting off with the basics, third party insurance is essential for several reasons:

Financial Protection

Accidents can be unpredictable. If you're at fault, costs for damages to another person's vehicle or property can be substantial, and third party insurance ensures you're not left with a hefty bill.

Liability Coverage

In case you're found liable for damages or injuries to another party, third party insurance comes to your rescue, covering those costs.

Peace of Mind

While not legally mandated in New Zealand, having it offers peace of mind. Knowing you're covered means you can drive without the added worry of potential financial setbacks if an accident occurs.

What does third party insurance typically cover?

Third party insurance specifically covers:

  • Damage to Other Vehicles: If you’re at fault in an accident, your third party insurance will cover the costs to repair the damage you caused to the other vehicle(s).

  • Injury to Others: Should someone get hurt as a result of your driving, your third party insurance will cover their medical bills and potential legal costs.

  • Damage to Property: This includes things like fences, buildings, or lampposts you might damage in an accident.

How does third party insurance work?

When you cause an accident:

  1. The injured party or the owner of the damaged property will usually make a claim against your insurance.

  2. Your insurance company will then assess the claim and determine how much needs to be paid out.

  3. Once agreed upon, your insurance company will cover the costs, ensuring that the injured party or property owner is compensated.

What are the advantages and disadvantages of professional indemnity insurance?

When deciding on Professional Indemnity it’s essential to weigh the pros and cons:

  • Affordability: Third party insurance is typically cheaper than comprehensive car insurance, making it a more budget-friendly choice for many drivers.

  • Protection Against Large Bills: Even minor accidents can result in large repair or medical bills for others. Third party insurance protects against these unexpected costs when you’re at fault.

  • Peace of Mind: While not a legal requirement in New Zealand, having third party insurance provides peace of mind, knowing that damages to another party’s property or their injuries will be covered.

  • No Cover for Your Own Vehicle: In the event of an accident, any damage to your own vehicle won’t be covered by third party insurance.

  • No Cover for Own Injuries: Any medical bills or rehabilitation costs for injuries you sustain in an accident would come out of your pocket.

  • Limited Scope: Third party insurance doesn’t include covers like theft, fire, or natural disasters, which comprehensive insurance might offer.

Are there common misunderstandings about third party insurance?

  • “It Covers My Car’s Damages”: Many think third party insurance covers their own vehicle damages—it doesn’t. It only covers damages to others and their properties.

  • “It’s the Same Everywhere”: Coverage specifics can vary from one insurance company to another. Always read the fine print.

  • “I Don’t Need it if I’m a Safe Driver”: Even the best drivers can have unexpected accidents or moments of oversight.


Why is third party insurance important? 

  • Financial Safety Net: Without third party insurance, you could face significant financial strain if you’re found at fault in an accident, having to cover repair costs for another’s vehicle or property or their medical expenses.

  • Responsibility Towards Others: Choosing to have third party insurance is a demonstration of responsibility towards other road users, ensuring they aren’t left with bills due to an accident you caused.

  • Risk Management: While not legally mandated in New Zealand, third party insurance acts as a form of risk management, protecting you from unforeseen liabilities that could arise from accidents.

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