Comprehensive insurance covers every car damage apart from the collision and will help you pay for the repair and other costs. whereas the third party insurance only damages the third party car and persons covered. Read on to analyze the difference between comprehensive and third party insurance.
What do Comprehensive Car Insurance and Third Party Insurance Mean?
Car insurance, also popularly known as motor insurance, provides coverage for damage or loss to a vehicle, be it a car, commercial vehicle, or a two-wheeler. This type of insurance helps mitigates monetary damage to vehicles due to an accident or any other unexpected situation.
Comprehensive car insurance is a type of insurance which protects the passenger and the vehicle from financial losses because of an accident. Third-party car insurance, on the other hand, only covers legal and financial liabilities arising due to a third-party claim.
Why Do We Need Car Insurance?
- We need car insurance because the government mandates it
- Suppose there is an ugly fender bender; we need to compensate third parties for damages caused to them or their car
- We need to meet the repair costs for the damage done to our own vehicle, no matter who caused the accident
- To protect your assets
- To cover your own passengers and get them treated for injuries
- We need car insurance to protect us from catastrophic incidents
What is the Effect of Not Having Car Insurance in India?
If you do not have car insurance, consequences may range from traffic violations, fines and penalties to suspension/disqualification of your driving license. The government of India has made it mandatory that all car drivers carry at least a third party insurance cover.
Differences Between Comprehensive Insurance and Third Party Insurance
Let us now dive into comprehensive vs third party insurance. The main difference between comprehensive and third party insurance is the kind of coverage it offers. Here is at table that helps understand the difference between comprehensive and third party insurance:
|Details||Comprehensive Insurance||Third Party Insurance|
|Definition||Insurance coverage for own damages and third party damages.||Cover for only third party damages|
|Details of Coverage||Coverage not only accidents but also thefts and damages from natural disasters.||Third party Damages and costs only. No other coverage is available|
|Benefits||Extensive coverage covering most eventualities. Also offers No claim bonus (reductions in renewal premium) if no claims have been made in the preceding year.||Covers liabilities arising from damages to third party damages and losses. You are protected from financial losses only for such events.|
|Limitations||Renewal premiums are expensive but protection ensures the least amount of personal financial losses in case of an accident.||Renewal premiums are lower but the financial protection offered is also limited and coverage does not extend to own losses.|
|Price of premium||Premiums are more expensive. They are calculated on the make, type of car, year of manufacture, the city where you are driving and add-on riders that you buy.||IRDAI (Insurance Development Regulatory Authority) pre-determines the amount of premium. It is determined based on the cubic capacity of the cars. Premiums are less costly.|
|Customization||Offers scope for customization through various add-on riders||Zero scope for customization|
|Which one do you choose||Though premiums are expensive , this is offset by the extensive coverage against accidents and more types of adverse events.||If you have an old car or a card rarely driven , then third party coverage is sufficient to comply with legal requirements.|
Also Read: Car Insurance Renewal
Pros and Cons of Comprehensive Car Insurance
Now, that we know the difference between comprehensive and third party insurance, let us understand the pros and cons of each type. Comprehensive insurance offers protection against losses and damages to your car and person as well as losses and damages suffered by a third party during an accident, caused by a collision of your car against the third parties. Key benefits of comprehensive car insurance include:
- All financial losses and damages to your own vehicle and person are covered. After a drastic collision, financial costs of injuries treatment and hospitalization may be high.
- Third party comprehensive insurance protects you from all such damages occurring from fires, accidents and collisions.
- All financial losses and damages to the third party and his person are protected. The third party is the person with whose car the collision has occurred.
- There are several add-ons which offer additional coverage and protection in case of an accident.
- Even though you pay higher premiums in comprehensive coverage but in the event of an accident when the insurance cover kicks in, this type of insurance offers the most financially optimum solution in terms of the coverage received.
- Comprehensive car cover also covers your car against natural disasters, since, these calamities are unpredictable and you never know when you will be an unfortunate recipient for such damages from natural accidents.
- You are compensated for car theft, the occurrence of which is increasing in major metros. Comprehensive insurance will enable you to replace one of your most prized possessions.
- Breakdown assistance is one of the add-ons that can be tacked on to your comprehensive insurance.
- This add-on will always ensure you are safely delivered home and your car hauled away for repairs without additional cost, claims or discomfort.
The cons of comprehensive insurance are the following:
- It does not protect you due to the financial loss because of the natural wear and tear of the card and depreciation of the car over time. You will not be compensated for this.
- Parts made of rubber and fiber within the car are covered damages under this policy.
- Force Majeure conditions like war or other man made calamities are not covered under this insurance.
Common Exclusions in Comprehensive Car Insurance
The common exclusions in comprehensive car insurance are as follows:
- Driving without a license
- Driving without a valid license holder
- Drunk driving
- Consequential damages that occur after the accident
- Contributory negligence like driving your car during floods or earthquakes.
Pros and Cons of Third Party Vehicle Insurance
This is the type of most basic and legally mandated insurance by the Government of India. It covers damages to only the third party’s car and person in the event of an auto collision.
You will have to bear to the financial consequences of damages to your car, your person or your passengers. The benefits of third-party insurance can be as follows:
- It covers damages and losses to third party persons or property during an accident or collision with your car
- It enables you to drive with a valid license supported by third party insurance cover
- It saves you from fines and penalties, suspension of the license etc.
- The insurance premium is less costly than comprehensive insurance.
Exclusions in Third Party Car Insurance
Some exclusions in third party car insurance are as follows:
- Drunk driving
- Own damages and losses to your own car or person
- Driving without a valid driving license.
- It is incumbent on you to purchase car insurance as it is made mandatory under the traffic rules of the Government of India.
- Buying car insurance protects you against unexpected financial losses and damages caused by your car’s collision with that of a third party’s.
- Making the right choice about the type of insurance cover is also important as it is the difference between the majority of losses being covered by insurance and you being left unprotected to cover a major part of the losses and damages on your own.
- Insurance is a hedge, a protection against unexpected, unanticipated events and the greater the amount of protection you have, the more secure you will be.
Also Read: Car Insurance with Zero Depreciation
Making the right choice of the type of insurance cover is important to protect the vehicle and passengers from unwanted damage and the losses that come with it. Weigh the pros and cons, cost versus the benefits and arrive at a calculated decision that best fits your financial and other circumstances.
FAQs on the Difference Between Comprehensive and Third Party Insurance
Comprehensive insurance is a better decision because it offers you better coverage and covers you against most eventualities.
It covers your own damages to property and person as well as third party damages and costs. Plus various add-ons which offer additional protection and coverage also cost higher.
Yes it is possible to make such a switch.
You will attract fines and penalties and also you will also be disqualified from driving.
The riders added will depend on the type of coverage and the age of the car. A return to invoice, zero depreciation cover and roadside assistance covers are useful riders.