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When you buy a car, one of the first, and most important, decisions you will make is choosing the right insurance. In many countries, including the UAE, third-party car insurance is the minimum legal requirement. But what exactly does that mean, how does third-party cover work, and is it the best choice for your situation? We will take a closer look at how does third-party car insurance work, explore third-party car insurance coverage, compare it to comprehensive policies, and help you decide if the benefits of third-party insurance meet your driving needs and budget.

What Is Third-Party Car Insurance?

In simple terms, third-party car insurance protects you against financial liability if you injure someone else or damage their property while driving. The “third party” refers to anyone other than you (the first party) and your insurer (the second party). In the UAE, driving without at least third-party cover is illegal, enforced by traffic police, the RTA, and Mulkiya renewal processes. The minimum coverage limits vary by emirate but generally include compensation for bodily injury or death and property damage.

How Does Third-Party Car Insurance Work?

When you purchase a third-party policy, you pay an annual premium determined by factors like your age, driving history, vehicle type, and region. Should you cause an accident, here’s the step-by-step process:

Notify Your Insurer Promptly

After guaranteeing safety and exchanging details at the accident scene, contact your insurer’s 24/7 claims hotline. Provide information such as date, location, police report number (if filed), and contact information for other parties.

Submit Required Documentation

You will most likely have to share the police report, photos of damage, estimates/receipts for repairs or medical bills, and any witness statements. Digital submissions via mobile apps have made this much easier in recent years.

Insurer Assessment

The insurer reviews the claim, verifies fault, and confirms coverage limits. For property damage, they liaise with approved garages or directly with the third party’s repair shop. For bodily injury, they assess medical costs or compensation amounts.

Settlement

Approved claims are settled directly with the third party or reimbursed to you if you paid it yourself. The insurer pays up to policy limits, and any excess liability beyond the cap is your responsibility.

It is worth remembering that your own vehicle repairs and personal medical expenses are not covered under third-party policies.

What Does Third-Party Car Insurance Cover?

Third-Party Property Damage

• Repairs for another driver’s vehicle

• Damage to public property or private fixtures like walls, gates

Third-Party Bodily Injury

• Medical treatment costs for injured third parties

• Compensation for permanent disability or death, as per local law and Diya regulations in the UAE

What Is Not Covered?

Third-party policies intentionally exclude protection for you and your vehicle. In particular, they do not cover:

Own Vehicle Damage

• Any repair or replacement expenses for your car after an accident.

Own Medical Costs

• Hospital bills, rehabilitation, or personal injury claims you file for your own treatment.

Theft, Fire, or Vandalism

• Losses from non-accident events fall outside the third-party scope.

Personal Belongings

• Items stolen from or damaged inside your car are not reimbursed.

Legal Defence Fees

• If you require representation to contest a liability claim, these costs may not be included.

To protect against those gaps, consider additional riders, like windscreen cover, personal accident, or theft/fire, but be mindful that these increase your premium.

Third-Party vs. Comprehensive Car Insurance

Third-party policies are budget-friendly but leave you vulnerable to repair and personal injury costs. Comprehensive plans cost more but deliver peace of mind by filling those coverage gaps.

Benefits of Third-Party Car Insurance

Affordability

For drivers on a tight budget, third-party premiums can be 30–50% cheaper than comprehensive policies, making legal compliance accessible.

Simplicity

Third-party cover avoids complex terms and lengthy policy documents. Fewer inclusions mean fewer exclusions to navigate and simpler claims procedures.

Legal Compliance

Meeting the mandatory requirement keeps your Mulkiya registration current and helps you avoid fines, plate impoundment, or even arrest for driving uninsured.

Focused Liability Protection

Coverage for third parties’ damages and injuries shields you from serious financial liabilities that could otherwise disrupt your financial stability.

Who Should Consider Third-Party Only?

Owners of Low-Value Cars

If repair costs exceed your car’s depreciated value, paying more for comprehensive cover may not be cost-effective.

Infrequent Drivers

Those who use their vehicles sparingly, like weekend drivers or retirees, can trade off the risk of repair bills for lower premiums.

Supplemental Cover Users

Drivers who top up third-party insurance with specific add-ons can craft a custom solution that balances cost and necessary protection.

Budget-Conscious Drivers

If your main goal is fulfilling legal obligations and avoiding liability suits, third party alone may be enough. 

However, daily commuters, families relying on their vehicles for work, or drivers in high-traffic areas should consider comprehensive policies.

How to Buy or Renew Third-Party Insurance

Compare Quotes

Use an online insurance broker and comparison platform such as Policyhouse to gather multiple third-party premiums and spot the best rates.

Check Policy Limits

Confirm the minimum liability thresholds for property damage and bodily injury in your emirate. These can differ slightly between Dubai and Abu Dhabi.

Review Exclusions and Riders

Identify what events or damages are excluded. For minimal extra cost, add riders like glass cover, personal accident, or roadside assistance.

Prepare Required Documents

Have your Emirates ID, driving licence, and Mulkiya registration details ready. Digital renewal through an app typically needs only the plate number and ID.

Complete Purchase or Renewal

Pay online via credit/debit card for immediate issuance of your digital insurance certificate.

Renewal Reminders

Opt in for email or SMS alerts to avoid lapsing policies and potential fines for uninsured driving.

Conclusion

Understanding how does third-party car insurance works helps you to make a smart choice between the lowest-cost solution and broader vehicle protection. While third-party car insurance coverage meets legal requirements and offers clear benefits of third-party insurance, it leaves significant repair and personal injury exposures unaddressed. 

By comparing quotes, examining policy details, and considering add‑on riders, you can craft an insurance package that balances cost savings with sufficient peace of mind. Whether you stick with third-party only or upgrade to comprehensive cover, informed decisions today prevent regrets tomorrow.