Sunday - Mar 18, 2018

Which Is Better: Comprehensive Car Insurance or Third-Party Insurance?

Car insurance exists to protect your car against damage due to an accident or other external means like theft, natural disasters, etc. There are mainly two types of car insurance coverage- a comprehensive car insurance policy and a third party cover. A comprehensive cover will allow you to protect your own vehicle against physical damage caused through an accident, theft, a storm etc. Third party insurance, meanwhile, protects a third party that may have been involved in an accident you caused. Third party insurance is mandatory in India as per the Motor Vehicles Act, 1988. Thus, the purpose of both is different. As with all types of insurance, in motor insurance as well, one size does not fit all. Choosing one is a matter of these three factors:

  • The value of the car
  • Coverage
  • Expenses

Based on these, decide the best car insurance policy for you and be sure to read the fine print and understand the terms and conditions before choosing one.

When it comes to car insurance, many people are still ignorant about its rules and necessity. Essentially, a car insurance policy protects your car against damage due to an accidental or other natural means. There are essentially two types of car insurance covers in India:

Comprehensive Car Insurance

This type of car insurance provides a wide coverage and often includes a third party liability cover as well, making a standalone third party cover unnecessary.  What’s more you have the option to boost your coverage by adding on riders like accessories cover, zero depreciation cover, hospitalization/ medical charges, etc. Comprehensive covers also come with various benefits like no claim bonuses, all day roadside assistance etc. Thus, this cover allows a driver to be stress free and is an extremely popular choice.

Benefits and Exclusions of a Comprehensive Cover

 There are several benefits to purchasing a comprehensive car insurance plan. It will protect you from:

  • Vandalism
  • Theft
  • Glass damage, like a damaged windshield or window
  • Damages caused by birds or animals
  • Damage due to a falling object
  • Fire
  • Flood
  • Natural disaster damage
  • Third party liability

Remember, only comprehensive car insurance covers own car damage. However, there are bound to be exceptions to this coverage as well. Though both the benefits and the exceptions are different for different polices, there are a few exclusions that remain the same for all. For example:

  • Accidents caused due to drunk/ intoxicated driving will not be covered
  • An accident caused by an unlicensed driver would also not be covered
  • Deliberate damage would not be covered
  • Wear and tear due to aging of car
  • Mechanical or electrical breakdown
  • Loss or damage due to war or nuclear attack

It is important to read the fine print and understand all the terms and conditions before buying the car insurance policy.

Third Party Insurance

Third party insurance covers the policyholder against the legal liabilities arising due to an accident caused by him/ her. It covers damages and injuries caused to third parties by the policyholder. It is also mandatory to have third party liability insurance for all vehicles driven on Indian roads, as per the Motor Vehicles Act, 1988.

Benefits and Exclusions of Third Party Insurance

Legal liabilities from death of a third party to injuries and damages to them and their property are all covered under third party liability insurance. Third party claims can be filed as ‘no fault liability claims’ or ‘fault liability claims’.

However, third party liability insurance does not pay for belongings inside the third party’s vehicle and it does not cover ‘own damages’ either.

Comprehensive Cover Vs. Third Party Liability Insurance

You cannot really compare these two types of car insurance as their purposes are quite different. However, while deciding what would suit you best, you can choose based on the following factors:

  1. Expenses: A comprehensive car insurance costs a lot more than third party liability insurance as it provides a wider coverage.
  2. Value of The Car: If your car doesn’t cost much to repair and parts are easily available, then availing just a third-party cover may be enough. For expensive, difficult to repair cars though, it’s better to have a comprehensive car insurance cover.
  3.  Coverage: If you’re looking for maximum coverage, going for a comprehensive car insurance plan is better as third party liability plans only cover third party damages and legalities.

Lastly, purchasing car insurance online is a good idea. The car insurance premium costs, on an online purchase, tend to be much lower than purchasing through a broker. It also allows you easy renewal of car insurance policy, with minimum paperwork, if you purchase car insurance online.