‘Family insurance’ or ‘Third party liability insurance’ is surrounded by confusion. Many people think that this kind of insurance covers their home or personal accidents. Nothing is further from the truth. Third party liability insurance covers the damage you inflict on others. If the policy includes personal legal protection it will also defend your interests if others inflict damage upon you or if you need to protect yourself from allegations made by others.
You have caused damage
If you, or a member of your family, accidentally inflict damage upon others as a private individual, your third party liability insurance will protect you and members of your family from the financial consequences.
For example, your five-year-old son is riding his bike, but he is not yet very skilful and loses his balance. He falls over with his bike against the side of a parked car and causes damage along the entire left hand side. You are personally liable. If you are held responsible your third party liability insurance will reimburse the victims on your behalf. If necessary the insurance will also cover victims’ physical injuries.
You suffered damage
If others inflict damage upon you, the personal legal protection attached to your third party liability insurance will ensure that your are compensated, if necessary via the courts. In that case third party liability insurance will ensure that the damage you have incurred is reimbursed. For example, your neighbour’s gutter is blocked and this leads to water damage in your child’s bedroom following a downpour. You will be compensated. Even though you have incurred damage in your house, you will not be compensated via your neighbour’s fire insurance but via his third party liability insurance.
To sum up: third party liability insurance only covers damage you inflict upon others, or demands compensation for damage inflicted upon you. It will never pay for your own damage.
You are summoned to appear in court
Even if you commit an error and are summoned to appear in court, your insurer will defend you. Your personal legal protection will provide you with a lawyer to defend your rights. Your third party liability insurance pays for all your legal costs.