Comprehensive Insurance Vs Third Party Insurance

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A comprehensive car insurance policy offers protection against third-party liabilities and own damages sustained by the insured car. While a mandatory third-party insurance policy only covers third-person liabilities. To know which motor insurance suits you and your car better, it is recommended to understand the differences between these policies.

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      What is Comprehensive Insurance?

      Comprehensive insurance is an extensive car insurance policy that covers risks related to own damages sustained by the insured car. As mentioned above, comprehensive car insurance is a combination of third party insurance and own damage insurance.

      This car policy provides comprehensive coverage against third party liabilities and loss or damages caused to the insured car due to accidents, vandalism, fire, theft, manmade and natural calamities. It also covers accidental third party property damages or physical injuries caused to the third person due to the insured motor vehicle.

      The owner-driver of the insured car also purchase a Personal Accident Cover of up to Rs. 15 Lakh under this policy.

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

      What Does Comprehensive Insurance Cover?

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

      • Vandalism, Strikes or Riots
      • Theft, Burglary or Housebreaking
      • Damages caused by a bird or an animal
      • Accidental damages when the insured car was in-transit via roadways, railways, airways, etc
      • Damage caused by falling objects, missiles etc.
      • Fire, self-ignition or explosion of the insured vehicle
      • Damages caused by natural disasters like floods, hailstorms, tornadoes, hurricanes, earthquakes etc.
      • Third-party liabilities (death, injury and property damage)

      What Does Comprehensive Insurance Not Cover?

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

      • Wear and tear and ageing of the motor vehicle
      • Depreciation borne by the car
      • Mechanical or electrical breakdown
      • Damages caused to tubes and tyres. If the vehicle has got its tubes and tyres damaged because of an accident, then the insurance provider's liability would be restricted to 50 percent of the total replacement charges.
      • Damages caused by a driver driving the car 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

      What is Third Party Insurance?

      A third-party car insurance policy provides coverage against any legal liability arising from injuries to a third party due to the insured car. It covers damages and injuries caused by the insured vehicle to a third-party person or property.

      As per the Motor Vehicles Act of 1988, it is mandatory for every motor vehicle owner to buy at least third-party insurance coverage in India.

      What Does a Third-Party Car Insurance Cover?

      A Third party car insurance policy covers the following risks caused due the insured four-wheeler:

      • Third-Party Injuries/ Death - It compensates a third person if he/ she gets injured or dies due to an accident caused by your car.
      • Third Party Property Damages - It covers your legal liabilities towards third parties for damaging their property from your car up to Rs 7.5 lakh.
      • Personal Accident Cover for Owner-Driver - It provides compensation to the owner-driver of the insured car in case of accidental death or disability.

      What Does Third Party Car Insurance Not Cover?

      Third-party car insurance doesn’t provide coverage for the cost of damage caused to any car or any belongings in the automobile if there is any unforeseen accident.

      Along with that, it won’t provide coverage to your car or if your belongings are damaged or stolen. Moreover, you cannot enhance a third-party plan's coverage by purchasing add-ons.

      You May Also Read: Check Used Car Valuation Online

      Comprehensive Vs Third-Party Insurance

      Comprehensive and third-party car insurance are 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:

      Points of Difference Comprehensive Insurance Third-Party Insurance
      Coverage Compensates for third party liabilities along with any damage sustained by the insured car due to unforeseen incidents. Provides coverage against losses and damages caused to third-party property, person, or vehicle due to the insured car.
      Mandatory Not mandatory as per the motor laws of India. To legally drive on the roads of India, it is mandatory to purchase this policy.
      Benefits Protects both damages to third-party and to the own car. In addition, a No Claim Bonus (NCB) is also available every year at the time of policy renewal. Offers legal and financial coverage if you mistakenly hurt some third-party person, property, or vehicle on the road.
      Limitations It is more expensive than third-party car insurance It does not cover the losses or damages sustained by the insured car.
      Cost 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 comprehensive car insurance. The price of the premium is pre-determined by IRDAI as per the cubic capacity of the cars.
      Customisation It lets you enhance your standard coverage by purchasing add-ons like NCB Protect, Zero Dep, etc. There is no scope for customisation.
      Which to opt for? Although this policy is more expensive than third-party insurance, it offers extensive coverage and hence more beneficial. Moreover, you can benefit from a 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.

      Factors to Consider Before Choosing the Right Car Insurance Policy

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

      1. 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 comprehensive insurance coverage.

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

      2. Coverage

        A third-party insurance policy provides coverage against the damages to any third-party vehicle and bodily injuries caused to any third party due to an accident. Few insurance providers charge a little extra for third-party coverage. However, this policy doesn’t provide any coverage against the damages caused to your own vehicle.

        If you’re seeking coverage for the damages caused to your vehicle, you should buy a comprehensive car insurance plan. This policy offers broad coverage, as it includes third-party liability as well. Comprehensive coverage is expensive compared to a third-party insurance, as it offers broader coverage.

      3. Cost

        A comprehensive plan is expensive compared to a third-party policy because it covers injuries, damages, and theft. However, 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 from insurer to insurer.

        If you want peace of mind and the right insurance coverage for your vehicle simultaneously, then you should buy a comprehensive car insurance plan since it will fulfil all your insurance needs.


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