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The primary difference between comprehensive and third-party car insurance is the extent of coverage offered under each plan. As we know, third-party car insurance is known to cover third-party liabilities only; on the other hand, comprehensive car insurance provides extensive coverage by protecting you against personal losses along with third-party liability cover. Given the choices, it is, therefore, necessary to choose a car insurance plan that fulfils your needs.

Besides, third-party car insurance is mandatory by law under the Motor Vehicles Act, 1988. Not having a valid car insurance plan will lead to traffic violation fines and even, in extreme cases, termination of your driving licence.

For those who are looking to buy a basic coverage plan with cheap premiums, third-party car insurance could be their go-to choice. However, those who seek all-around protection for their vehicle should purchase a comprehensive car insurance policy. As stated earlier, comprehensive car insurance will cover you against third-party liabilities and any financial damage incurred by your vehicle in case of accidents.

Knowing the difference between third-party vs comprehensive insurance is essential to make an informed decision. In this article, we have discussed the same in detail.

Difference Between Third-Party Insurance and Comprehensive Insurance

For your understanding, we have differentiated third-party car insurance and comprehensive insurance based on several factors. Refer the following table to know more:

 

 

THIRD-PARTY CAR INSURANCE

COMPREHENSIVE CAR INSURANCE

WHAT IS IT?

It is a basic car insurance plan that only covers damages and losses your vehicle has caused to other people, vehicle, or property.

It provides all round protection to your vehicle. Not only does it financially cover third-party liabilities but also protects you and your car.

WHAT IS THE COVERAGE?

Like we mentioned earlier, it only offers coverage for third-party damages and losses. It includes damages/losses caused due to accidents or collisions, injuries to a third person or their vehicle, and property.

Also, it provides personal accident cover that protects you from personal injuries or death in case of any unfortunate events.

Comprehensive insurance provides extensive coverage that not only protects you against the damage/loss caused to a third-party but also covers for damage/loss incurred by you.

For instance, the loss incurred due to a flood-like situation in the city, a comprehensive policy will cover it for you.

BENEFITS

It protects you for the loss or injuries to people, their vehicle, or property. Here, you do not have to pay the damage/loss incurred from your pocket.

It protects both damages incurred by your car as well as third-party liabilities.

Moreover, you can benefit from No Claim Bonus (NCB) during car insurance renewal – only if you do not claim during the policy term.

PREMIUM PRICE

Relatively cheaper than comprehensive insurance coverage).

Usually, high premium rates compared to third-party coverage. The premiums are based on factors like the city of residence, car model, and add-ons you opt for (if any).

CUSTOMISATION

You cannot customise this policy.

You can customize this policy by adding top-up covers like –

●     Zero depreciation car insurance cover

●     Engine and gearbox protection

●     Return to invoice

●     Breakdown assistance

With this, we believe you have a basic understanding of the two policies available in the market. Further, let us dive into the details of comprehensive car insurance and third-party car insurance so that you can make an informed decision.

What is Comprehensive Car Insurance?

A comprehensive car insurance policy is a recommended choice in India. It not only covers all the third-party liabilities and damages but covers the damage and loss incurred by you and your car as well.

Wondering how comprehensive insurance works? Well, consider the following scenarios.

A tree limb crashes through your car roof and causes ₹10,000 in damages. Now, if you have comprehensive car insurance, your insurer will compensate you for the incurred loss when you file a claim. In case you have opted for deductibles, then you are liable to pay a portion of the loss incurred while the remaining amount will be taken care of by the insurer.

Read more about deductibles in car insurance on Finserv MARKETS.

What are the Advantages of Comprehensive Car Insurance?

Apart from the above-stated benefits, comprehensive car insurance has other advantages too. It includes:

  • Own Car Damage:

Along with third-party coverage, this policy also covers claims made for damages to your vehicle.

  • Personal Accident Cover:

In case of partial or permanent disability because of the accident, your insurer will compensate you or your family members.

  • Human and Natural Calamities:

Comprehensive car insurance covers for loss/damage incurred due to natural and human-made disasters.

  • Protection Against Theft:

You can even file a claim if your car is stolen. The insurer will compensate for the amount equal to the insured declared value (IDV) mentioned in your policy.

  • Protection Against Third-Party Liabilities:

One thing that is great about buying comprehensive car insurance is that the policy covers loss/damage to third-party person or property. So, in addition to covering the expenses for damage to your vehicle, the policy also protects you against third-party liabilities.

  • Add-On Covers:

A comprehensive car insurance plan allows you to enhance the scope of the policy with several add-on covers. Some add-on covers worth considering are zero depreciation cover, no-claim bonus (NCB) protection cover, engine protection cover, etc. You can choose these add-on benefits at the time of purchase or renewal, as per your need and affordability.

Limitations of Comprehensive Car Insurance

  1. The policy does not cover damages incurred due to daily wear and tear.

  2. The policy does not protect your car against deprecation.

  3. Car components made of fibre and rubber are not covered under the policy.

  4. The policy does not cover damages incurred due to nuclear attack or war.

Inclusions of Comprehensive Car Insurance

Your comprehensive car insurance policy will offer protection against the following things:

  • Any loss/damage incurred by the vehicle due to accidents, theft, or natural/man-made calamities.

  • Any loss/damage to the vehicle due to vandalism or riots.

  • Any loss/damage to the vehicle due to fire or explosions.

  • Physical injuries and death of any third person due to your vehicle.

  • Damage to third-party property due to your vehicle.

  • Compensation for accidental deaths/disability to the owner-driver of the vehicle.

Exclusions of Comprehensive Car Insurance

Some of the common things not covered under comprehensive insurance are as follows:

  • Damage incurred post-policy expiration or before renewal.

  • Damage incurred due to war-like situations.

  • Damage/loss caused when driving under the influence of intoxicants.

  • Consequential damage.

  • Damage/loss due to malicious activity.

What is Third-Party Car Insurance?

As stated earlier, third-party car insurance is mandatory by law. Therefore, it is an ideal policy to purchase if you want a basic car insurance plan. Third party car insurance is also the most common type of insurance available in the market. It generally covers the damages and losses incurred by the third person, vehicle or property. Note that the policy does not extend protection to your vehicle in case of damage/loss due to unforeseen events.

What are the Advantages of Third Party Car Insurance?

Some of the prominent benefits of third-party car insurance are as follows:

  • Injury Liability:

In case you injure someone with your car, then your insurer is accountable to pay the compensation for the loss incurred.

  • Property Damage Liability:

In case you cause damage to someone’s vehicle or property because of your car, then your insurer will pay that person for the incurred loss.

  • Legal Protection:

Third-party car insurance is a mandatory document needed to legally drive on the Indian roads. Besides, you also need a valid driving licence, PUC, and vehicle registration certificate.

  • Protection Against Traffic Fines:

In case you fail to present a valid car insurance policy to a traffic police officer when asked, it will lead to hefty penalties. As per the 2020 amendment to the Motor Vehicles Act, 1989, the penalty for driving without a valid car insurance policy is Rs. 2,000 and/or imprisonment up to three months for the first offence. For future offences, the fine is Rs. 4,000 and/or imprisonment up to three months. Having a third-party car insurance policy will protect you against these traffic fines.

Limitations of Third-Party Car Insurance

It is imperative to know that third-party car insurance comes with compensation limits, namely:

 

1. Compensation Limit for Injuries Wreaked by Accidents:

 

Your third-party insurance will cover the medical and treatment expenses for minor injuries caused to the third person in an accident. However, the victim is compensated for the legal liabilities only after the court’s verdict.

 

2. Compensation Limit for Partial/Permanent Disabilities caused by Accidents:

 

If the accidental injuries lead to partial/permanent disability, the compensation amount is significantly more. However, the insurer will take care of the medical and hospitalisation costs after the injured third-party files a claim against the insured.

 

3. Compensation Limit for Death caused by Accidents:

 

If the accidental case leads to the death of the third-party, a lump sum amount is paid to the dependents of the victim by the insurer. However, the settlement depends on the verdict of the court after due process, which may take some time.

 

4. Compensation Limit for Damage to Property caused by Accidents:

 

In case there is third-party property damage due to the insured vehicle, the insurer will compensate for the incurred loss. This amount may vary depending on the loss incurred and the insurer’s terms and conditions for the same. However, the limit is capped at a maximum of ₹7.5 lakh.

Inclusions of Third-Party Car Insurance

Your third-party car insurance will cover you when:

  • The insured vehicle accidentally injures someone, leading to hospitalisation, partial/permanent disablement, or death.

  • The insured vehicle damages third-party property.

Exclusions of Third-Party Car Insurance

Things that are not covered in third-party insurance include:

  • Injury to Self:

If you cause damage to someone or something, they can claim on your third-party insurance. However, you receive nothing. There is no compensation for injuries incurred by you which means you’ll have to pay for the treatment yourself.

  • Damages to Your Vehicle:

Any damage/loss incurred by your car is not covered under third-party insurance. Also, there will be no compensation in case of total loss or theft of the vehicle.

  • Drunk Driving or Driving without Driver’s Licence:

Your third-party car insurance plan will not entertain any claims made against the policy if you are found driving under the influence of intoxicants or without a valid driving licence.

Even though third-party car insurance is mandatory by law, you can get extensive coverage with a comprehensive insurance plan.

Reasons to Upgrade to a Comprehensive Car Insurance

Like we mentioned earlier, the comprehensive plan provides all-around insurance protection to your vehicle. Apart from this, here are a few reasons to upgrade to a comprehensive car insurance plan:

  • Own Damage Cover:

Comprehensive car insurance insures damage to your vehicle through accidents, theft, and loss due to man-made and natural disasters.

  • Third-Party Liabilities:

All the third-party liabilities such as damage incurred to another person’s vehicle or loss of third-party property is covered.

  • Policy Customisation:

If you are not satisfied with the coverage offered on your existing policy, the comprehensive plan allows you to opt for additional coverage. For instance, you can opt for zero depreciation cover that ensures the depreciation factor is not taken into consideration during claims.

  • Customise IDV:

With a comprehensive car insurance plan, you have the liberty to customise your car’s Insured Declared Value (IDV).

  • Personal Accident Cover:

Comprehensive car insurance comes with personal accident coverage, and you do not have to purchase it separately.

Factors to Consider Before Buying Car Insurance

The following factors need to be considered when purchasing car insurance:

  • Make sure that you are verifying the IDV calculated by the insurer.

  • Depending on your vehicle’s age, make sure that you are opting for the right add-on covers.

  • Choose the right coverage, either third-party insurance or comprehensive insurance, when purchasing the policy.

A Final Thought

Understanding third-party insurance for cars and its comparison with comprehensive insurance is essential. It not only helps you make an informed decision but also allows you to safeguard your precious possession. We believe that the above table will help you understand the differences and make an informed decision.

Meanwhile, if you’re looking for comprehensive car insurance, you’re in the right place.

If you consider buying car insurance plans at Finserv MARKETS, you can benefit from features such as cashless claim settlements, no vehicle inspection, hassle-free renewals, and more. Calculate the cost of the policy using our car insurance premium calculator and make an informed decision. So, don’t wait. Purchase car insurance today!

Check Out Motor Insurance Plans Available at Finserv MARKETS

Difference between Third Party and Comprehensive Insurance FAQs

  • ✔️Is buying a comprehensive car insurance plan a smart decision?

    Yes. A comprehensive car insurance policy will cover you against third-party liabilities and damage incurred by your vehicle as well. Besides, you can always enhance the scope of your comprehensive car insurance plan with add-on covers. That way, rest assured as you and your vehicle will always be protected with a comprehensive car insurance plan, making it a smart decision.

  • ✔️Can I switch from third party car insurance to comprehensive car insurance?

    Yes. You can switch from a third party car insurance plan to a comprehensive car insurance plan at the time of policy renewal.    

  • ✔️What happens if I do not have a car insurance policy when driving?

    If you are caught driving without a car insurance policy by a traffic police officer, you will have to face hefty penalties as per the New Motor Vehicles Act, 2019. The punishments for driving with a car insurance policy in India is Rs. 2000 and/or imprisonment for three months for the first offence. For further offences, the punishment is Rs. 4000 and/or imprisonment for three months.

  • ✔️What are some of the best add-on covers for a comprehensive car insurance plan?

     A few worthy add-ons to opt with a comprehensive car insurance policy are as follows:

    • Zero depreciation cover

    • Engine protection cover

    • Roadside assistance cover

    • Return to invoice cover

    • No-claim bonus protection cover

    • Consumable cover

  • ✔️Does buying add-on covers affect the car insurance premium?

     Yes. Each add-on cover you opt for comes at a nominal cost that is over and above your existing car insurance premium amount. You can get an exclusive idea of how much the policy will cost you based on your desired coverage and add-on benefits by using the car insurance calculator available on Finserv MARKETS.

  • ✔️Can I buy add-on covers with my third-party car insurance plan?

     No. The facility to enhance the scope of your policy with add-on covers is only available when you purchase a comprehensive car insurance plan.