When you purchase a car for the first time, the car insurance aspect of it is usually taken care of by the car dealer. Maybe the excitement of purchasing a car is so intense that people often neglect the intricacies involved in buying car insurance. Many tend to ignore the fact that you can modify the policy suggested by the dealer or choose a different insurer as per your needs. It is crucial to consider buying a suitable car insurance policy because there are multiple options available. This is where knowing the difference between a Third-party Liability policy, a Comprehensive plan, and a Zero Depreciation Cover will come in handy.
Knowing basic details about the mandatory cover, a wide-ranging plan, and add-ons such as Zero Depreciation can help provide financial assistance concerning unfortunate events like a car accident. This article focuses on the distinguishing factors between the basic Third-party Car Insurance plan and a Zero Depreciation Add-on cover. Read ahead to dive into details about these prominent car insurance policies.
Difference Between Third Party Car Insurance vs Zero Depreciation Cover:
The fundamental difference when it comes to Third-party Liability Policy vs Zero Depreciation Cover is that of a ‘Policy’ and an ‘Add-on’. A Third-party Liability Plan is an insurance ‘policy’ whereas a Zero Depreciation Cover is an ‘Add-on’, and not a stand-alone policy. This Add-on needs to be clubbed with a Comprehensive Car Insurance Policy. Some insurers might offer the Zero Depreciation Cover as a part of the Comprehensive Plan; thereby calling the policy as a Zero Depreciation Comprehensive Policy.
What is a Third-party Liability Car Insurance Policy?
Third-party Liability car insurance is a mandatory requirement if you want to drive your car on Indian public roads without any issues. This is the policy that police officials check when they ask you to show your insurance papers. Not having this policy or driving with an expired one can lead to monetary fines and legal hassles. Unfortunately, if you are involved in a car accident and are not covered by this compulsory cover then things can get a lot complicated for you from a legal standpoint.
The premium for such a policy is regulated by the Insurance Regulatory and Development Authority of India (IRDAI). It is based on the car’s engine (cubic capacity). All insurers charge the same for issuing a Third-party Liability policy.
Features and Benefits of Buying a Third-Party Car Insurance:
Here’s a list of benefits associated with 3rd party car insurance.
- It is a simple and easy-to-understand policy.
- Buying it fulfils mandatory requirements as per The Motor Vehicles Act.
- Penalties can be avoided by holding an active Third-party policy.
- Price and coverage remain the same across insurers so there is no need to compare plans based on premium and coverage.
- You get basic coverage at a nominal cost with this policy.
Also, read: Comprehensive Insurance vs Zero Depreciation
What is Zero Depreciation Cover in Car Insurance?
A Zero Depreciation Cover is an additional cover that can be purchased along with a Comprehensive Car Insurance Policy. It comes at an extra cost. Depreciation can be understood as a reduction in the value of an asset over a period. This usually happens organically due to the passage of time.
While settling claims, the insurer considers depreciation of the vehicle’s parts. As a result, the claim amount is less. But with the Zero Depreciation Car Insurance Add-on, the insurer does not consider depreciation and the claim amount is more. Different insurance companies offer this Add-on at different prices—there is no standard pricing for this Add-on. Buying this is completely optional and should be driven by need.
Features and Benefits of Buying a Zero Depreciation Car Insurance Add-on:
Here are the major benefits associated with the Zero Depreciation Cover.
- It offers additional coverage at a marginal cost.
- You can expect a relatively higher claims pay-out with this Add-ons as compared to without it.
- The Add-on’s terms and conditions are simple to comprehend.
- You can choose to have this for one year and skip it for the next year—it is flexible.
- Zero Depreciation is widely available across insurers.
Difference between Third-party Policy vs Zero Depreciation Insurance Add-on in a Policy:
The following table will highlight major differences between 3rd party car insurance vs Zero Depreciation Cover. For a detailed explanation concerning the policy’s coverage, you can refer to the respective Policy Wordings.
|Pointers||Third-party Liability Cover||Zero Depreciation Cover|
|Nature||This is a stand-alone policy.||This is not a stand-alone policy; it is additional coverage that needs to be purchased along with a Comprehensive plan.|
|Scope||Covers the policyholder against legal liabilities arising out of injury or damages (concerning the insured car) to third parties or their property.||Negates the calculation of depreciation while settling claims, thereby offering a higher claim amount to the insured.|
|Pricing||The premium for this policy is determined by the Insurance Regulatory and Development Authority of India (IRDAI).||The premium for this Add-on is determined by individual insurance companies.|
|Compulsion||This is a mandatory legal requirement.||This is a voluntary cover and there is no compulsion to purchase it.|
Also, read: What is No Claim Bonus (NCB) in Car Insurance?
Which Type of Insurance Cover is Right for You?
There is no option when it comes to a basic Third-party cover—you must buy it as it is mandatory. The question is, whether you want to buy it as a stand-alone cover or as a part of the Comprehensive cover. In case you opt for a Comprehensive cover, the option to purchase productive Add-on covers like Zero Depreciation also becomes available. You can base the decision on the car’s age, usage, and your budget.
If you are someone who wants extra coverage, then going for a Comprehensive Policy with Add-ons like Zero Depreciation seems like a better option. A Third-party policy does not offer ‘Own Damage’ cover, but a Comprehensive plan covers it. Instances such as theft and damages to the car due to fire, calamities, flooding, etc. are covered in an Own Damage plan.
Whether you want just the simple Third-party plan or a wide-ranging Comprehensive cover with a Zero Depreciation Add-on, you can buy the cover of your choice easily thanks to online car insurance.
Also, read: Impact of Depreciation In Car Insurance
Frequently Asked Questions:
This section is all about common questions related to covers, inclusions, and exclusions concerning different types of car insurance policies.
No, a Zero Depreciation cover cannot be purchased with a Third-party Liability plan. It can be purchased with a Comprehensive Car Insurance policy.
Seems unlikely, as Zero Depreciation Add-on is usually available for a year.
Yes, all car insurers offer the Third-party Liability plan via the online mode or the offline mode.
Details about the car insurance policy and its elements like Add-ons are mentioned in detail in the respective Policy Wordings. You can access the same on the insurance company’s website. If you are finding it difficult to do so, simply connect with your insurance company and request for assistance.