Difference Between Comprehensive Insurance and Third Party Insurance
When buying a car insurance policy, there are various factors that you need to consider. One such important factor is choosing the type of coverage you want for your car. Third-party and comprehensive insurance policies are the two types of car insurance policies available to vehicle owners. While third-party insurance is mandatory in India, a comprehensive policy offers some amazing benefits too. Today, we will understand what comprehensive insurance and third-party insurance are and compare them to help you make a decision.
Car Insurance Types: What are Comprehensive Insurance and Third-Party Insurance?
A car insurance policy offers protection to your car from unforeseen and unavoidable risks. Based on the type of cover you purchase, you can get protection against financial losses arising from the theft of your car or damages caused due to an accident or mishap. There are two types of car insurance policies available:
- Third-party liability policy – This is a mandatory policy that all car owners need to purchase while buying a car. This policy offers cover against any damage to a third-party (property or person/s) in the event of an accident or a mishap involving your car.
- Comprehensive policy – This policy covers all third-party liabilities as well as damages caused to you and your car. Hence, this is the most preferred car insurance policy.
Difference Between Third-Party Insurance and Comprehensive Insurance
| Feature | Third-Party | Comprehensive |
| Mandatory? | Yes, as per the Motor Vehicles Act, 1989 | No, but recommended for better coverage |
| Coverage | This policy offers coverage for damages to a third-party person or property caused by your car if it gets into an accident or a collision. Further, most third-party insurance policies offer a personal accident cover to protect you against financial losses arising from physical injuries and even death. | This policy offers a comprehensive cover to any damage or loss to your car or a third-party property and injury or death of a third-party person or you. It also protects your car from damages due to various other factors like natural disasters, fire, explosion, self-ignition, lightning, and terrorist activities. |
| Limitations | This policy does not cover costs associated with repairing the damages to your car due to any reason. Hence, if your car is in an accident, then you will have to bear the costs of repair. | Being a comprehensive policy, you are protected against any costs arising from damages to you, your car, third-party person, or third-party property if your car is in an accident or collision. |
| Customizations | You cannot customize a third-party policy since it offers basic protection as required by the law. However, some leading providers offer a few add-ons with a third-party cover. | You can customize a comprehensive policy based on your needs by choosing from a range of add-ons provided by most insurers. Some such add-ons are zero-depreciation cover, no-claim bonus protection, roadside assistance, engine secure, consumables expenses cover, etc. |
| Premium | The car insurance premium amount is decided by the Insurance Regulatory and Development Authority (IRDAI) based on the engine capacity (cc) of the car. These policies are cheaper than comprehensive policies. | The premium of a comprehensive policy is based on a range of factors like the age of your car, the city you drive it in, model and make of the car, add-ons selected, etc. These policies are costlier than third-party policies. |
Comprehensive Insurance vs Third-party Insurance: Which One Should You Opt For?
A comprehensive policy is usually recommended as it offers better coverage and protects you against financial losses that can arise due to any unforeseen event. However, if you don’t use your car regularly or drive a really old car, then a third-party policy should serve your needs.
It is important to remember that the premium amount of the policy will increase based on the coverage you need. However, it is essential that you opt for a comprehensive insurance policy to ensure an all-round coverage for your vehicle.
A comprehensive plan covers the majority of the damages; however, there are exceptions where the insurer will not cover the costs. These include:
- Repair costs associated with any damage to your car due to wear and tear
- Any costs arising out of an accident or collision if you were driving under the influence of alcohol
- Any intentional damage to your car or a third-person property, etc.
So, if you have purchased a new car or use your car regularly or wish to have an all-encompassing coverage, then a comprehensive policy is better since it can help you manage the high costs of repairs with ease. With the right combination of add-ons, you can have a well-protected car.
Summing Up
Remember, when you are on the road, accidents can happen. Sometimes, accidents or mishaps can burn a hole in your pocket. Hence, it is prudent to be prepared to manage the costs associated with damages or losses arising from such unexpected events. So, if you are planning on buying a car, ensure that you assess all aspects, choose between a third-party and comprehensive policy carefully and buy the right car insurance for your beloved vehicle. We hope that this article offered clarity regarding the differences between comprehensive and third-party insurance to help you make the decision. Stay safe!
