Comprehensive Insurance vs Third Party Car Insurance
When shopping for a car insurance policy, it is important that you are buying a policy which is according to your needs. Before getting your car insured, understand the type of policy which will be fully suitable for you.
Once you are clear about your needs, buying a beneficial policy will be easy. Let us first understand what is third-party car insurance and what is comprehensive car insurance:
Third-Party Car Insurance Meaning
A third-party car insurance is a type of four-wheeler insurance that offers financial protection to you in case of damages or injuries caused by your car to another person, their vehicle or their property.
- It is the most basic form of auto insurance coverage in India, where the owner of an insured car is the first party, an insurer is the second party and the person involved in an accident with the insured car is third-party.
- Every four-wheeler owner/first party legally need a third-party car insurance cover to drive on the Indian roads.
- It ensures that in case of a road accident, the person being harmed by your vehicle is compensated.
Comprehensive Car Insurance Meaning
A comprehensive car insurance is a combination of third-party liability insurance and own-damage cover.
- A comprehensive car insurance policy does more than just financially cover you against damages caused by your car to another person or their property.
- Repairs for the damages caused to your car, under circumstances like an accident or natural calamity, are covered by your insurance company.
- The extent of coverage offered by your insurance company under a comprehensive insurance will depend on the policy terms and conditions.
Now that you know the meaning of Third-party Car Insurance and Comprehensive Car Insurance, let’s compare their features:
Third-party Car Insurance vs Comprehensive Car Insurance
Here’s how Third-party car insurance stacks up against Comprehensive car insurance.
| Type | Third-party Insurance | Comprehensive Insurance |
|---|---|---|
| What does it cover? | It covers the damages caused to another individual or their property due to accidents. | In addition to third-party liability coverages, it covers all kinds of damages caused to your vehicle because of accidents, sabotage, fire, theft, natural calamities, etc. |
| What does it not cover? (Exclusions) | Damage caused to: Own vehicle Injury caused to: Self Damage caused due to: - Theft - Natural calamities - Sabotage - Fire - Civil disturbance Damage caused when: - Driving/riding without a valid licence - Driving under the influence of drugs or alcohol - The policy is not active - Loss of personal belongings kept in the car. | Damage caused when: - Driving without a valid licence - Driving under the influence of drugs or alcohol - The policy is not active - Loss of personal belongings kept in the car |
| What are the add-ons? | Third-party liability insurance comes with an additional personal accident or PA cover. | - Engine protection - Zero Depreciation - Return to Invoice Note: Personal accident cover is already included in the primary coverage |
| Which is the cheapest? | Third-party insurance is the cheapest considering it is the most basic type of policy with a low number of inclusions. In fact, IRDAI fixes the rates of third-party component in car insurance on the basis of the engine capacity of your vehicle. These rates are revised every year or so. | Since it offers a wide coverage, you pay a higher amount as the Comprehensive insurance premium. The premium would have two primary components: Third-party premium (as fixed by IRDAI) and own-damage premium. |
| Which is the best? | Has limited coverage and does not cover you or your car. | Such a policy offers an extended coverage. It covers you, the third party and both party’s vehicles. So, it keeps you financially protected in all cases. |
Let’s understand the difference between third-party insurance and comprehensive insurance.
Situation
Imagine that you are driving, at night, in low visibility. Suddenly, it seems like an animal crosses the road. You pressed the brake and veered left. You feel two sudden jolts. It was because, you hit a person when you veered left and broke into a rice farm, damaging the person’s property.
Naturally, the person you hit is very angry and in pain. Now you need to pay for the medical treatment of the person, as well as a compensation for the damages caused to his property.
In this situation, your car insurance will come handy. Here, the type of insurance policy you have bought plays an important role.
What Happens When You Have a Third-party Car Insurance?
In case you have bought third-party car insurance: You try to placate the person and explain about the animal. You take the person to the hospital, and explain that your third-party car insurance could fetch him a compensation for the injury as well as damage to the paddy field. Your insurer will not pay for the damages caused to your car due to this accident.
What Happens When You Have a Comprehensive Car Insurance?
In case you have bought comprehensive car insurance: You try to placate the person and explain about the animal. You take the person to the hospital, and explain that your third-party component of comprehensive car insurance could fetch him a compensation for the injury as well as damage to the paddy field.
When you file a claim, your insurer will bear the cost of treatments for the person you hit. The loss caused to the person, due to the damaged paddy field, will also be borne by your insurer. Apart from these, under the own damage component, your insurer will also bear the cost of getting your car repaired.
Now that you know the basic difference between Third-party and Comprehensive car Insurance, let’s see which is the best among both:
Which Is the Best? Third-party Car Insurance or Comprehensive Car Insurance?
A Third-party Car insurance is mandatory by Indian law, the meaning of this statement is: it is compulsory for you to buy at least a Third-party insurance policy for your car. However, it only covers damage caused to other vehicles, individuals or property. It has limited coverage.
What about the damage that your car may suffer?
Your car may be damaged in cases other than minor road accidents. A broken windshield during the storm, fire, and even theft are covered under a comprehensive car insurance policy. It offers extensive coverage. This policy financially covers you and your car too. This makes a comprehensive car insurance far more useful option. The scope of coverage is the main difference between third-party and comprehensive car insurance policies.
How to Buy a Third-party Car Insurance and Comprehensive Car Insurance Policy?
In case of a third-party car insurance all you need to do is fill the policy form, make payment and get your policy documents.
For buying a comprehensive car insurance policy, you need to fill the policy form and choose add-ons (if required). Then the insurance company will get your car inspected. You should soon receive your policy documents after the inspection.
You can buy a car insurance policy in three ways after you decide which kind of policy will be the most suitable for your car.
- Online
- Through an agent
- By visiting the branch
Online: You can directly buy a car insurance policy by visiting Acko’s website. All you need to do is select the type of policy, fill in your details, select add-ons if required and proceed towards making the payment.
Through an agent: You can get in touch with an agent, who will guide you on which policy could be suitable for your needs. After you fill the necessary form and submit the documents, your agent will further guide you on making the payment. You will receive your policy documents either by post or from the agent.
By visiting the branch: Once you select the insurance company for getting your car insured, visit their branch and ask for the policy details. At the branch office, you will get an application form. Fill it with your details and make payment. You may have to visit the insurance company again or you will receive the documents by post.
In any case, be sure of going through the fine print of the policy documents carefully. At the time of claim, it will be beneficial if you are aware of the inclusions & exclusions of your car insurance policy along with the terms & conditions of the insurance company.
When to Buy Third-party Insurance? When to Buy Comprehensive Insurance?
A Third-party car insurance is compulsory as per The Motor Vehicles Act, 1988. But a comprehensive car insurance is the smarter choice. Also, your comprehensive plan includes third-party coverage too. That said, you could still be confused about which plan to choose.
Consider these three factors while buying a car insurance policy:
- Value of the car
- Coverage
- Expense
Value of the car
- If you have a high-value car, you could consider a Comprehensive car insurance policy.
- In the event of loss or damage, you can need not pay for the high expenses from your pocket.
Coverage
- If you want to be stress-free in the event of any loss, opt for a Comprehensive policy.
- It covers the damage caused to your car and any possible injuries.
- This is in addition to the cover that a third-party policy offers.
- If you want a wider coverage, go for a comprehensive policy.
Expense
- If you do not have a high insurance budget, opt for a third-party car insurance.
- It is cheaper than a Comprehensive car insurance.
- In the long run, however, it could turn out to be costlier.
7 Must-Know Terms While Buying Third-party or Comprehensive Insurance Policy:
- Add-ons
- Zero Depreciation
- No Claim Bonus
- Deductible
- Sum Assured
- IDV
- Return To Invoice
Add-ons
- These are extra covers that you might need to cover your car better against financial loss.
- You need to pay extra to get these add-ons.
Zero-depreciation
- The value of your car reduces due to wear & tear and general ageing.
- This add-on cover ensures that depreciation on parts like metal, plastics, fiberglass, etc. is not deducted from your claim amount.
No-claim bonus
- You get a bonus for not making any claims in an active policy year.
- Your consecutive year’s premium can be lowered by up to 50% on the accumulation of no claim bonus.
Deductible
- This is the part of your repair bill that you pay from your pocket.
- It is usually a small amount like Rs. 1,000.
Sum assured
- The insurer guarantees to pay a maximum sum of money in the case of loss or damage. This amount is called the sum assured.
Insured declared value (IDV)
- It is the current market value of your car.
- It is also the maximum claimable amount paid by your insurer.
- In the case of theft or total loss, the IDV is the maximum claim amount you get.
Return to invoice
- In the case of total loss or theft, this add-on cover pays you the original value of the car.
- This also includes the registration charges and the road tax paid.
Frequently Asked Questions
Can I switch from a third-party insurance policy to a comprehensive insurance policy on renewal?
- Yes, you can change the type of your car insurance policy.
- Your car will be thoroughly inspected before your policy approval.
- So, just make sure to get those pre-existing dents on your car repaired, before inspection.
Why is buying third-party car insurance mandatory in India?
Buying a third-party car insurance is mandatory in India because, it ensures that the third party liability, damaged/ injured in an accident involving your car, will be compensated for the loss. It covers the cost of treatments for a person injured due to your car and compensates for the loss occurred due to the damaged property.
Why is comprehensive car insurance more expensive than third-party policy?
Comprehensive car insurance is more expensive than third-party policy because a third-party car insurance policy covers only the damages caused to the third party person or property. It offers the most basic coverage.
On the other hand, a comprehensive car insurance policy pays for the damages caused to your car as well as injuries caused to you, along with compensating the third-party. This extended coverage makes comprehensive car insurance more expensive than third-party policy.
Why is buying comprehensive car insurance a smarter choice?
Buying comprehensive car insurance is a smarter choice because it offers a dual benefit of third-party coverage as well as own damage. Plus you can choose add-ons which will further enhance the scope of your insurance policy.
What are the best add-on covers for a comprehensive car insurance policy?
The best add-on covers for a comprehensive car insurance policy are:
- Zero-depreciation
- NCB protector
- Roadside assistance
- Return to invoice
- Loss of personal belongings
Buying an add-on cover totally depends on your personal requirements. So, it is very important to access them before choosing the right cover and to not overspend on car insurance.
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