Know the Difference : Comprehensive Car Insurance vs Third-party Car Insurance
Ketki Jadhav
Dec 02, 2022 / Reading Time: Approx. 4 min
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Having a car insurance policy is crucial to protect yourself from the financial losses arising out of hefty damages, theft, mishap, fire, transport, natural calamities, etc. However, many car owners get perplexed when it comes to buying the best-suited car insurance. Since Third-party Car Insurance is a mandatory requirement and is cheaper than Comprehensive Car Insurance, many car owners buy only Third-party Car Insurance, which might not be sufficient for them. Hence, before buying car insurance, it is important to understand the difference between Comprehensive Car Insurance and Third-party Car Insurance and choose the one that matches your requirements the best.
What is Third-party Car Insurance?
Third-party Car Insurance financially protects you against any third-party damage, loss of property, death, or physical injury caused by your vehicle. It reimburses the parties for the losses or damages caused by the insured car. So, if you meet with an accident and a third party gets injured and their vehicle is damaged, your insurance policy will take care of the third party's medical expenses as well as the repair expenses of their vehicle. However, bear in mind that it does not cover the loss or damage caused to your own vehicle.
As per the Motor Vehicles Act 1988, third-party insurance coverage is mandatory to drive your vehicle on a public road. Driving without a valid motor insurance policy is considered a criminal offence, and your vehicle's registration will be temporarily cancelled until you buy a valid policy. Besides, it can lead to heavy penalties and imprisonment of the vehicle owner.
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Common exclusions in Third-party Car Insurance:
1. Damages to the insured car are not covered under this type of insurance.
2. Personal accident insurance cover and own damage insurance cover are not provided.
3. No Car Insurance claims are entertained after the expiry date of the policy.
4. The claim gets rejected if the car is used for fraudulent or illegal activities.
5. The claim gets rejected if it is found that traffic rules were not followed. For example, driving under intoxication, driving without a valid driving licence, etc.
6. If the policyholder fails to submit the required documents within a given time, the claim can get delayed or rejected.
7. The claim gets rejected if it is found that the policyholder has violated the terms and conditions of the policy.
What is Comprehensive Car Insurance?
A Comprehensive Car Insurance Policy provides you with all the benefits of Third-party Insurance as well as protection for you and your vehicle. It covers losses and/or damages caused by an accident, theft, burglary, fire, explosion, transport, etc. So, in case of an accident, it will cover the medical expenses of both the parties (you and the third party) and repair/replacement expenses of your car and third-party property. As discussed, many car owners buy only a Third-party Car Insurance Policy because it is considerably cheaper than a Comprehensive Car Insurance Policy. Ideally, it is advisable to buy a Comprehensive Car Insurance Policy to secure your car from unforeseen events to fulfil all your motor insurance needs.
Common exclusions in Comprehensive Car Insurance:
1. It does not cover consequential damages.
2. The policy does not cover the add-ons if they are not purchased.
3. The claim gets rejected if the car is used for fraudulent or illegal activities.
4. No claims are entertained after the expiry date of the policy.
5. The claim gets rejected if it is found that traffic rules were not followed.
6. If the policyholder fails to submit the required documents within a given time, the claim can get delayed or rejected.
7. The claim gets rejected if it is found that the policyholder has violated the terms and conditions of the policy.
Third-party Car Insurance vs Comprehensive Car Insurance:
| Parameter |
Third-party Car Insurance |
Comprehensive Car Insurance |
| Coverage |
It is basic car insurance that covers only third-party liabilities. |
As the name suggests, it is complete car insurance that covers third-party liabilities as well as insured cars in the form of Own Damage Insurance. |
| Own Damage protection |
It is a standalone policy that does not provide an own damage protection. |
Apart from the damage due to a mishap, it also covers losses and damages due to theft, riots, natural calamities, fire, etc. |
| Customisation |
Third-party Car Insurance Policy does not allow any customisation. |
By purchasing certain add-ons, you can customise your Comprehensive Car Insurance Policy as per your requirements. |
| Premium |
Since it offers basic cover, the premium is considerably lower than a comprehensive plan. |
While the premium is higher compared to the basic plan, it provides much wider coverage, ultimately making it cost-effective. |
| Premium Calculation |
The Insurance Regulatory and Development Board of India (IRDAI) declares the Third-party Car Insurance premium annually. The premium depends upon the car engine's cubic capacity, and the insurance company has no right to change it. |
The premium varies from insurer to insurer. The premium of a Comprehensive Car Insurance Policy depends upon the Insured Declared Value (IDV) and the add-ons chosen. |
| Legal Requirement |
As per Motor Insurance Act, third-party cover is mandatory for driving your car on a public road. |
While it is not mandatory, comprehensive cover is advisable to ensure your car is financially protected. |
Which car insurance cover is right for you?
A Comprehensive Car Insurance Policy provides third-party as well as own damage protection. Hence, if you are looking for coverage for yourself and your car, a Comprehensive Car Insurance Policy is ideal for you. Similarly, if you own a high-end car and cannot afford the cost of repairs and replacements, it makes sense to opt for a Comprehensive Car Insurance Policy, as Third-party Car Insurance will not cover the damage that occurred to your own car.
Each individual has different requirements for insurance. Therefore, it is advisable to analyse your needs and choose the add-on with your Comprehensive Car Insurance Policy. By choosing the right add-ons that match your requirements you can convert your basic policy into a customised policy. For example, car insurance generally does not cover off-road driving, but by purchasing add-ons related to off-road driving, such as roadside assistance cover, tyre protection cover, etc., you can get the most out of your insurance policy.
However, if your car is old and you do not care if it goes out of shape or stops working, Third-party Car Insurance will be the suitable option for you. You may also consider buying Third-party Car Insurance if you are going out of town for a long period or do not intend to use a car for a long time for any reason. This will help you save on the car insurance premium because it does not make sense to pay the high insurance premium if you are not using the car.
Warm Regards,
Ketki Jadhav
Content Writer