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Comprehensive vs Third-Party Car Insurance

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When it comes to Car Insurance, there are two popular options for you to choose from - Third-party Car Insurance and Comprehensive Car Insurance.

What is a Third-Party Car Insurance?

As per The Motor Vehicles Act, third-party car insurance is mandatory while driving a vehicle in India. It reimburses the third-parties for losses/damages caused by the insured four-wheeler.

What Is Comprehensive Car Insurance?

Comprehensive Car Insurance offers extensive coverage that covers Third-party Liabilities and Own Damage. Buying this type of policy is not mandatory by law, however, due to its enhanced coverage, it is the preferred choice for many car owners.

The following table will differentiate the two policies which will help you select the policy that is best suited to your requirements.

Third-party vs Comprehensive Car Insurance

Parameter Third-party Liability Cover Comprehensive Cover
Meaning A mandatory car insurance policy to cover third-party liabilities and comply with the law. A car insurance policy that offers enhanced coverage in the form of Own Damage Cover. It also includes the cover offered by the third-party liability plan.
Add-on Availability No Yes
Compulsion This is compulsory. This is not compulsory.
Coverage It covers the damages caused to another individual or their property due to the insured car. In addition to third-party liability coverages; theft, damage from man-made or natural calamities, fire, etc. are also covered for your car.
Is It Enough? No, as the insured car is still exposed to ‘Own Damage’ risks. Yes, as this is a comprehensive policy and can be customised with add-ons.
Premium This is priced lower due to its limited coverage. The cost of this car insurance policy is higher due to its wider coverage.
Rates The cost of a Third-Party Car Insurance Policy is fixed by the Insurance Regulatory and Development Authority of India (IRDAI) based on the car engine’s cubic capacity. The cost of this policy is fixed by the insurer as per the terms and conditions of the policy.
Discounts No discounts are available. Discounts in the form of anti-theft devices, voluntary deducibles, and no-claim bonus are available.

Benefits of Buying a Comprehensive Car Insurance

Here are the top benefits of purchasing a Comprehensive Cover for your four-wheeler.

1. Own Damage Cover

A comprehensive car insurance policy not just financially cover you against damages caused by your car to another person or their property. It also covers damages to the insured car under circumstances like fire, theft, accident, riots, or natural calamities.

2. Add-ons

If you opt for a Comprehensive Insurance Plan, you can customize the plan with car insurance add-ons. You can choose from a host of beneficial add-on covers such as the Zero Depreciation, Roadside Assistance, Engine Protection, etc.

3. Law-abiding Citizen

You shall be considered a law-abiding citizen concerning the mandatory car insurance requirement. This is because the Comprehensive Car Insurance Policy includes the coverage for third-party liabilities (mandatory) as well as Own Damages.

Exclusions in a Comprehensive Car Insurance

There are situations where you cannot demand the insurer to settle the claim. Exclusions are mentioned in the respective insurance plan’s Policy Wordings. Note that there might be slight variations in the list of exclusions stated by different insurers. Thus, study the exclusions carefully before buying the policy and making a claim application. Here’s a list of top exclusions.

The Comprehensive Plan will not cover instances if the policy had expired at the time of the occurrence.

The Comprehensive Plan will not cover instances if traffic rules were not followed.

The Comprehensive Plan will not cover instances in case of fraudulent activities conducted by the applicant.

The Comprehensive Plan will not cover instances where Consequential Damages are concerned.

This plan will not cover instances mentioned under add-on coverage if the respective add-ons were not purchased by the policyholder.

It does not include Personal Accident Cover, which mandatory by law and covers both permanent disability/death of the person while driving a car.

Benefits of Buying a Third-Party Car Insurance

Listed below are the benefits associated with purchasing a Third-party Car Insurance policy for your four-wheeler.

As per The Motor Vehicles Act, owning a car insurance is mandatory while driving on the Indian streets. Not following this rule can lead to a monetary loss in the form of penalties.

2. Liability Coverage

Liability coverage is the basic cover. With this policy, your insurer shall cover instances where you injure someone else or damage their property while driving your insured car.

Exclusions in a Third-Party Insurance

Here is a list of exclusions of a Third-party Car Insurance Policy. You can go through the entire list of exclusions by reading the Policy Wordings.

No vehicle insurance cover for damages to the insured car.

No vehicle insurance cover for Personal Accident. 

No vehicle insurance cover for an expired policy.

No vehicle insurance cover if traffic and other rules are not followed.

No vehicle insurance cover if proper documentation is not submitted during a claim.

No vehicle insurance cover for violating the terms and conditions of the policy.

Why Should You Buy a Comprehensive Car Insurance?

Here are the top advantages of choosing a Comprehensive Car Insurance Plan over a Third-party Insurance Plan.

1. Covers Own Damages

This cover will come in handy in case of losses due to natural calamities, theft, riots, accidents, etc. With this cover, the insurance company will pay for the bulk of the damages. In the absence of this cover, you will have to pay the entire repair bill from your pocket, which can result in depletion of savings.

2. Mandatory Coverage

Do not worry about monetary penalties for not complying with the law concerning buying Third-party Liability Cover. This plan includes mandatory coverage. Thus, by buying this cover, you abide by the law as well as insure your car against damages to third parties.

3. Pick the Insured Declared Value (IDV)

Here, you have the option to pick your vehicle’s IDV. This is the amount your insurer is liable to pay the policyholder where the insured vehicle is damaged beyond repair or is stolen. You can reduce the premium by selecting a lower IDV. However, this will also result in lower claims pay-out in case of a total loss.

4. Flexibility

It is not like if you have purchased a Comprehensive Plan, then you must stick with it. If you feel you are not comfortable with the plan, you can change it while renewing the policy. You can also switch the insurance company.

Benefits of Buying Car Insurance Policy On ACKO

You can buy a car insurance policy online, through an agent, or by visiting the branch. However, buying insurance online is the most convenient and easy way to insure your car. Here are a few benefits of buying an online car insurance policy on ACKO.

1. Save Time

You can compare and buy a car insurance policy anytime and anywhere in just 5 minutes by visiting www.acko.com or downloading our mobile app.

2. No Paperwork

Unlike in the offline method, you don't need to go through the tedious paperwork process that takes a lot of effort and time. With our robust digital infrastructure, you can get your policy in a jiffy.

3. Maximise Savings

When you buy online on ACKO, there are no agents involved. Thus, you can buy a policy at a lucrative price, which helps you save money while buying insurance for your car.

How to Select the Best Insurance Policy for You?

Here are a few things to consider while selecting the right car insurance policy for you.

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1. Understand Your Requirement

Figure out your insurance requirements and match the cover that meets them. For instance, if you reside in a location that is prone to floods, selecting a Comprehensive Plan with an Engine Cover add-on is a good deal.

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2. Age and Usage of the Car

If you have just purchased a new car, the combination of a Comprehensive Plan and a Zero Depreciation Cover is ideal. On the other hand, if you do not use your car much and are not worried about paying for the repairs, you can choose the minimalistic Third-party Car Insurance.

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3. Fine Print

Go through the fine print of the policy documents carefully. During a claim, it will be beneficial if you are aware of the inclusions & exclusions along with the terms and conditions of the policy.

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4. Right Insurer

Choose an insurance cover that provides the best price for your car insurance policy. Your insurer should also provide value-added services (instant pickup, free doorstep delivery) that are useful in times of need.

Important Car Insurance Terminologies

Here are some important car insurance terminologies you should be familiar with while buying, renewing, or claiming insurance.

1. Add-ons

These are extra services and coverage you ask voluntarily for your policy. They increase your premium but also provide better coverage. Ensure that you select only those add-ons that meet your requirement.

2. Deductibles

You need to pay a small portion of the bill, say Rs. 1,000. It’s called a Deductible. You can voluntarily increase this to lower premiums. But, at the time of claim, you will have to pay the increased deductible amount from your pocket.

3. No Claim Bonus (NCB)

Insurers reward you when you do not make a claim. Every consecutive (for five years) no-claim year gets you a bonus or premium discount called ‘No-Claim Bonus’. The NCB discount can go upto 50%.

4. Coverage

The coverage and services offered vary across different insurance policies. Hence, don't forget to read the policy document carefully to understand the inclusions and exclusions to experience a smooth claim settlement journey.

5. Zero Depreciation

Car depreciates due to wear and tear with time. This is called Depreciation. Ensure that your insurer pays you the whole value of your car without deducting any depreciation through a Zero Depreciation cover.

6. Insured Declared Value

Insured Declared Value (IDV) is not the vehicle’s resale value. However, for the sake of understanding, it can be looked at as the prevalent market cost of the car. It is the amount that the insurance company will pay if the car faces a total loss.

Key Takeaways

Here a few important things to remember while buying a car insurance policy.

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1. Select Wisely

You have a choice when it comes to picking the type of car insurance policy.

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2. Follow the Law

It is a must to buy at least a Third-party Liability Cover for your four-wheeler.

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3. Use of Add-ons

You can buy add-ons only with a Comprehensive Plan. However, adding them will increase the premium amount.

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4. Validity

Insurance plans are usually for a year after which you can select a different cover or an insurer.

Car Insurance Frequently Asked Questions

Here are some frequently asked questions in case you need further help in understanding the difference between a Third-party Plan and a Comprehensive Cover.

FAQs on Comprehensive Vs Third-Party Insurance

Why is buying Comprehensive Car Insurance a smarter choice?

Buying Comprehensive Car Insurance is a smarter choice because it offers the dual benefit of third-party coverage as well as Own Damage cover. Plus, you can choose add-ons that will further enhance the scope of your insurance policy.

Can I switch from a Third-party Policy to a Comprehensive 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 the inspection.

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 along with compensating the third-party. This extended coverage makes Comprehensive Car Insurance more expensive than Third-party Policy.

FAQs on Comprehensive Insurance Plan

What are the best add-on covers for a Comprehensive Car Insurance Policy?

The best add-on covers for a comprehensive policy are:

Buying an add-on cover totally depends on your personal requirements. So, it is very important to assess them before choosing the right cover and not overspend on car insurance.

Will the insurance premium go up if I buy two add-ons with my Comprehensive Cover?

Yes, each add-on comes at a cost. The more add-ons you include in your Comprehensive Cover, the higher will be the final payable premium.

FAQs on Third-Party Insurance Plan

Why is buying third-party car insurance mandatory in India?

Buying a Third-party Car Insurance Policy is mandatory in India as per The Motor Vehicles Act. It ensures that the third-parties involved in an accident involving your car will be compensated for the loss.

Can I choose the IDV in a Third-party Policy?

No, the concept of IDV does not apply in a Third-party Policy. IDV comes into the picture in case of own Damage, which is not offered by the Third-party Policy.

FAQs on Car Insurance

What if there is a mistake in the policy emailed to me by the insurance company? Will I be required to purchase the policy again or is there a mechanism to rectify the mistake?

Usually, minor errors in the policy document can be rectified by a process called Policy Endorsement. You must inform the insurer about the mistake and they will rectify it and send a new policy document.

I drive slowly, follow traffic rules, and have never been involved in a car accident. Do I still need to buy car insurance?

You need to buy car insurance irrespective of how good you are behind the steering wheel. The compulsory aspect of a car insurance policy has more to do with covering third-party liabilities. For exhaustive coverage, you can buy a Comprehensive Plan.

What is an example of fraudulent activity while claiming car insurance?

Raising a claim to make a profit from the insurance company is considered as a fraudulent activity. For policyholders, insurance is for reducing losses and not maximising profit.

CIN: U66000KA2016PLC138288

IRDAI Registration No: 157

Category: Non-Life Insurance

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