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Overview
What Is Third Party, Fire & Car Theft Insurance?Insurance companies offer third party, fire and theft car insurance in the United Kingdom, Australia and New Zealand. It covers the cost of injury and damages to unrelated third parties in car accidents, the cost of damage caused to the car by fire and remunerates the owner if the car is stolen. Such insurance is not mandated by law.
Identification
The third party component of such insurance plans often covers damages like injuries and accidental deaths to other people. It also covers damages to property caused by an accident, such as if the car crashes into a restaurant. The fire component pays for damages to the car caused by lightning, fire or an explosion, so long as the accident did not occur due to gross negligence or intentionally destructive behavior on the part of the driver. Theft coverage reimburses the owner if the car itself, components or accessories--such as hubcaps or audio equipment--are stolen from the vehicle.
Significance
In the UK, only third party auto insurance is required to lawfully operate a motor vehicle. Third party, fire and theft incorporates the former while providing additional coverage and fulfills the legal requirement. Third party, fire and theft is generally very expensive relative to standard car insurance, in part because it is not mandatory, but also because the companies that offer it put themselves at risk of paying out massive amounts of potential damages.
Considerations
The theft protection provided by this insurance policy will likely serve most customers the best. Fire damage, although catastrophic and always a possibility, is a relatively rare occurrence, while many drivers will suffer theft at least once in their car ownership career. Most insurers will cover the majority of a loss through theft, and may provide discounts if the customer in question takes special action to secure their car as much as possible, such as keeping it in a locked garage and installing special security equipment such as an immobilizer.
Warning
Drivers from the UK traveling through the European Union will almost always find that their coverage level decreases remarkably when they leave their native country. The EU requires that all insurers provide a certain level of minimum coverage depending on the policy type, including third party, fire and theft. Some insurance companies also offer special deals that provide full policy coverage for a limited period of time while the car is in the EU.
Benefits
Drivers without third party, fire and theft insurance are completely liable for any damages caused by their car in an accident. While the mandatory third party insurance covers some of the worst potential damages--those related to accidental injuries and deaths--property damage can easily run into the millions of pounds, which can easily turn even a well-off driver into a pauper. This insurance does not cover accidents caused by negligence, such as damages caused while intoxicated.
