Difference Between Comprehensive Insurance and Third Party Insurance

Selecting the right kind of insurance plan for your vehicle is important in India. This is because having at least a basic insurance that provides coverage for third-party is mandatory and not having one such cover can lead to violation of the law. Moreover, sometimes this may lead to driving license disqualification.

To protect you from damages, fines, and losses that can arise because of a mishap, which can be big or small, there are two types of car insurance plans available in the market. These insurance plans are – comprehensive car insurance and third-party car insurance. To know which insurance will suit your car and you better, it is suggested to know the difference between these two car insurance types.

What is Comprehensive Insurance?

Comprehensive car insurance is an extensive car insurance plan that covers the insured vehicle against third-party liabilities and own damage. Also known as own-damage car insurance, this policy offers protection against accidental damages, loss or damages due to man-made and natural calamities, fire etc.  Comprehensive car insurance can be availed for a regular premium, along with some add-on covers as well.

It pays for damages incurred amid unforeseen natural calamities such as cyclone, earthquake, flood, etc. It also safeguards the insured car from man-made disasters including theft, accident, incursion, burglary, fire, etc.

The coverage can be boosted by selecting additional covers, such as engine protector, accessories cover, medical expenses, zero depreciation cover, etc. This cover is widely popular, as it offers full-fledged coverage and it leaves the policyholder stress-free.


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The Benefits of Purchasing a Comprehensive Car Insurance Plan

A comprehensive car insurance plan safeguards the insured vehicle against the following:

  • Vandalism
  • Theft
  • Glass damage like as a damaged windshield
  • Damages caused by a bird or an animal
  • Damage caused by falling objects, missiles etc.
  • Fire
  • Flood
  • Damages caused by a natural disaster like a wind storm, hail storm, tornado, hurricane, etc.
  • Third-party liability

Without a comprehensive insurance plan, a  claim can’t be filed if your car is damaged and the reason isn’t a road mishap.

You may like to Read: What is Comprehensive Car Insurance

Comprehensive Car Insurance Plan Exclusions

Here are the factors that are excluded from the coverage of a comprehensive insurance plan:

  • Wear and tear and aging of the automobile
  • Depreciation
  • Mechanical or electrical breakdown
  • Damages caused to tubes and tyres. In case the vehicle has got its tubes and tyres damaged because of an accident, then the liability of the insurance provider would be restricted to 50 percent of the total replacement charges.
  • Damages caused by a driver driving without a valid driving license.
  • Damages caused due to driving under the influence of intoxicants.
  • Any loss or damage due to mutiny war, or a nuclear attack

Third-Party Car Insurance Plan

A third-party car insurance plan provides coverage against any legal liability arising out of injuries to a third-party when the policyholder is at fault. It covers damages and injuries caused by the insured vehicle, to a third-party person or property. As per the Motor Vehicles Act, 1988, it is mandatory for every motor vehicle owner to buy at least third-party insurance coverage in India.

Benefits of Purchasing a Third-Party Car Insurance Plan

A third-party car insurance plan covers a vehicle’s owner against any legal liability, including death or bodily injury to a third party or damage to their property with the involvement of the insured vehicle. As per the Motor Vehicle Act, a third-party claim can be filed under the category of "no fault liability claims" in which the claimant is not obligatory to allege or prove the negligence on the part of the involved vehicle that has caused the accident or "fault liability claims".


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Third-Party Car Insurance Plan Exclusions

A third-party car insurance plan doesn’t provide coverage for the cost of damage caused to any automobile or any belongings in the automobile if there is any accident. Along with that, it won’t provide coverage to your car or if you belongings are damaged or stolen.

Comprehensive Car Insurance Vs Third-Party Car Insurance

Comprehensive and third-party car insurance is different from each other based on coverage and purpose. A table of comparison of these two car insurance plans is the best way to know their difference:

 

Comprehensive Car Insurance

Third-Party Car Insurance

Definition

It provides complete insurance coverage for your car and you. This plan not only takes care of the liabilities of third-party but also provides coverage for you and your car.

The most basic car insurance plan that provides coverage against losses and damages that your car can cause to some third-party property, person, or vehicle is third-party insurance.

Details of the coverage

This car insurance plan provides vast coverage as it not only protects your car against loss or damage caused to a third-party but also covers losses and damages to your car and you. For instance, if your car has faced damages because of flood in the city, then your comprehensive car insurance provides coverage for it.

It offers coverage for third-party only. This means the loss or damage occurred to third-party property or person is covered in this policy and any loss or damaged occurred to your car is not covered. In addition to this, third-party insurance also provides personal accident that protects you from death or injury.

Benefits

This insurance plan protects both damages to third-party and to own car. Therefore, no matter what comes across, you are protected against almost everything. In addition to all this, No Claim Bonus (NCB) is also there that you can avail every year at the time of policy renewal.

This insurance cover protects you if you mistakenly hurt some third-party person, property, or vehicle on road. So, you know you do not have to make a dent in your pocket in case of such mishaps.

Limitations

It is expensive than a third-party car insurance plan.

It does not provide cover for the losses or damages that you may cause to your car.

Price of Premium

The premium is higher than third-party insurance but is based on many factors like the make and model of your car, the city in which you are driving, and the riders you take.

It is comparatively cheaper than a comprehensive car insurance plan. The price of the premium is pre-determined by IRDAI as per the cubic capacity of the cars.

Customization

The feature of customizing your comprehensive plan is there that allows you to add different riders as per your requirements.

There is no scope of customization.

Which to opt for?

Although this plan is expensive than third-party insurance, it offers you extensive coverage and hence more beneficial. Moreover, you can avail the benefit of No Claim Bonus, if you do not make any claims in a policy year.

If your car is very old or you are going to sell out your car very soon or one of your cars is driven very rarely, then opting for a third-party insurance cover is recommended.

Difference between a Third-Party Cover and Comprehensive Cover

The pros and cons of these two kinds of car insurance plans depend on many elements. It is crucial to understand these factors so that you can analyze, compare, and then make a wise decision.

The Value of a Car

In case the value of your vehicle is low, it’s recommended to buy third-party insurance only, as the repairs to the damages could be managed very easily. It is economical to pay the repair bills as compared to paying for the high premium of a comprehensive insurance cover.

On the other hand, if your car is new and expensive, it is recommended to buy comprehensive insurance coverage.

Coverage

A third-party insurance plan provides coverage against the damages to any third-party vehicle and bodily injuries caused to any third party due to an accident. There are a few insurance providers that charge a little extra for third-party coverage. It doesn’t provide any coverage against the damages caused to your own vehicle.

In case you’re seeking coverage for your vehicle, you should buy a comprehensive car insurance plan. It offers a wide coverage, as it includes third-party liability as well. A comprehensive plan is expensive as compared to a third-party insurance plan, as it offers broader coverage.

Expenses

A comprehensive plan is expensive as compared to a third-party plan because it offers coverage for injuries, damages, and theft.

It is good to be safe than sorry. A road mishap is unfortunate and it can wash out your savings in one go. There can be minor variations when it comes to the exclusions and benefits, as it varies insurer to insurer. If you want the peace of mind and the right insurance coverage for your vehicle at the same time, then you should buy a comprehensive car insurance plan since it will fulfill all your insurance expectations.


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Written By: PolicyBazaar - Updated: 09 September 2020
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