Difference Between Third Party and Comprehensive Insurance
04 Nov 2019
The primary difference between the comprehensive and third party insurance is the kind of coverage the two plans offer. As we all know, third party car insurance plans only cover third-party liabilities; whereas comprehensive plans provide extensive coverage by protecting you against your own loss as well.
Hence, you must choose a plan that best suits your car insurance requirements. Third party car insurance is mandatory by law under Motor Vehicle Act, 1988. So, in case you do not have basic coverage under your name, you might have to face hefty penalties. In extreme cases, it can also lead to termination of your driver’s license.
On the other hand, comprehensive car insurance plans are highly recommended as it provides extensive coverage. With comprehensive car insurance, you will be covered against 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. And in this article, we are helping you understand the same.
What Is Comprehensive Insurance?
A comprehensive car insurance policy is the most recommended and valuable insurance in India. It not only covers all the third-party liabilities and damages caused by your vehicle but covers the damage and loss incurred by your car as well.
You must be wondering how comprehensive insurance works?
Well, consider the following scenarios.
A tree limb crashed through your car roof and causes INR 10,000 worth of damage. Now, if you have comprehensive car insurance under your name, 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. The remaining amount will be taken care of by the insurer.
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 for damages incurred by your vehicle.
Personal Accident Cover: In your unfortunate dismissal, or in case of partial or permanent disability because of the accident, your insurer will compensate you or your family members. This thus reduces the financial overhead.
Human-Made and Natural Calamities: Comprehensive car insurance covers for loss/damage incurred due to natural and human-made disasters.
Theft: If your car is stolen, you can file a claim. The insurer will compensate for the amount that will be equal to the insured declared value (IDV) mentioned in your policy.
Exclusions In A 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 situation
Damage/loss caused when driving under the influence of intoxicants
Damage/loss due to malicious activity
What Is Third Party Insurance?
A third party car insurance policy is the most common type of insurance available in the market. It generally covers only the damages and losses incurred by the third person, vehicle or property.
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.
Exclusions in a Third Party Car Insurance
Things that are not covered in third-party insurance are as follows –
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.
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.
Even though third-party car insurance is mandatory by law, you can get extensive coverage with a comprehensive insurance plan.
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 covers 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.
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.
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).
You cannot customize this policy
You can customize this policy by adding top-up covers like –
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 covers damages incurred by your vehicle in case of 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 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.
What are the factors to consider before buying car insurance?
Following factors need to be taken into consideration when purchasing car insurance -
Make sure that you are checking the IDV of your car 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 what is 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 appropriately. We believe that the above table will help you understand the differences and make an informed decision regarding the same.
Are you looking for comprehensive car insurance?
Well, then get in touch with us at Finserv MARKETS. With Car Insurance at Finserv MARKETS, you can benefit from features like no vehicle inspection, cashless servicing, hassle-free claim settlements, and more. So, don’t wait. Get Car Insurance with us today!