Third Party Or Comprehensive Coverage?

As an owner, your car is your pride and joy. Should You Go For Third Party Or Comprehensive Coverage For your Car?

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Third Party Or Comprehensive Coverage

Should I Go For Third Party Or Comprehensive Coverage For My Car?

As an owner, your car is your pride and joy. Why spend so much of your hard-earned money on buying your dream car and then fail to protect it? Car Insurance is a difficult subject to understand and gain clarity on. It’s daunting to figure out whether third party or comprehensive car insurance you need to get for your car and what suits you and is within your budget!

Insurance for automobiles is mandatory in India. If one is caught without a valid car insurance, it results in paying extremely heavy fines. Further, car insurance provides a safety net to the owner, to fall-back on, in case something goes wrong.

What makes it more difficult is the two different types of car insurance policies you can get for your vehicle. So, we are bringing some clarity on the differences and similarities between Third-Party car insurance and Comprehensive car insurance.

Third-Party Car Insurance

Third-Party car insurance, also known as liability cover is compulsory to have for any automobile in India. Generally, third-party insurance is inexpensive and comes with low premiums. Third-Party insurance prices are set by the government and are revised every year. As the name suggests, third-party car insurance offers cover to the policy holder against any financial liability for damage to a third-person.

Inclusion – What are you covered for?

A Third-Party insurance policy covers individuals, vehicles or properties who have been injured or damaged by the policy holder’s vehicle.

Exclusions – What are you not covered for?

  • Since the owner cannot be termed as a third party, it excludes any injury caused to the owner himself.
  • It also excludes any damage caused to the owner’s vehicle for any reason whatsoever.
  • Theft of the vehicle.

Add-Ons, When you need more protection

  • Most insurance companies provide add-ons like theft, fire, or a combination of both, etc. with third-party car insurance policies.
  • Other add-ons, like personal accident cover are also popular, if one is going with a third-party insurance policy.

Advantages:

No limit to compensation in case of death or injury to a third party.

Disadvantages:

  • A third-party insurance policy doesn’t cover damages to your car during an accident nor any injuries suffered by you (that could be a huge bill for you!)
  • Even instances of theft, fire, natural calamities etc. are not covered under such a third-party insurance.

Comprehensive Car Insurance

A comprehensive insurance policy is the combination of both third-party insurance and a protection cover for the owner and his vehicle as well. A comprehensive policy is also referred to as a package policy. Usually, comprehensive car insurance policies are more expensive and come with higher premiums.

Inclusions – What are you covered for

  • The comprehensive car insurance includes a lot more protection as compared to third-party car insurance.
  • Inclusions include, theft of owner’s vehicle, damage of the vehicle during natural calamities, injuries suffered by the owner.
  • Comprehensive car insurance also includes protection against the car getting damaged during riots, acts of terrorism or by malicious

– + All the inclusions of third-party car insurance.

Exclusions – What are you not covered for

  • Ageing (wear and tear), electrical/mechanical failure of the owner’s vehicle.
  • Damage to owner’s vehicle caused by driver without a valid driving license.
  • Damage to owner’s vehicle caused by driver under the influence of intoxicating substances.
  • Damage to owner’s vehicle outside of the sovereign territory of the Union of India

Add-Ons, When you need more protection

Most insurance companies provide add-ons like engine and gearbox protection, zero depreciation cover, key-loss cover, road-side assistance etc.

Advantages:

  • A comprehensive insurance policy covers damages to your car during an accident and any injuries suffered by third parties.
  • Even instances of theft, fire, natural calamities etc. are covered.-

It even covers everything under the third-party insurance. 

Disadvantage:

Higher premium cost annually (but way better protection, so overall if you have an accident you’ll pay a fraction of the cost)

Third Party Car Insurance vs Comprehensive Car Insurance

We get asked this a lot, which type of car insurance should owners of vehicles go for. We always state that both third-party insurance and comprehensive insurance have different use cases.

We recommend getting the third-party insurance only to people who have older cars or who are on a tight budget. Since, third party car insurance doesn’t cover anything except third-party liability, it is much cheaper to get.

If the value of your car is low, it is better to get a third-party car insurance policy. Mainly because it is cheaper to pay for repairs for an old car, than to pay high premiums. This works if your older car is barely used, and does only a few trips in a month. Your risk is low.

But in general, we feel that a comprehensive insurance is better, because it financially protects you and offers extended coverage. Since it also includes the third-party car insurance component, it is a little more expensive but well worth it. Since, repairing cars have become expensive nowadays, everybody prefers to get a comprehensive car insurance policy.

The fact that a comprehensive insurance policy covers both you and your car, it is a much better option. Specially, if your car is new or you’re not a budget or well, you’re just one of those people who doesn’t like being stressed about the expenses of repairing their car.

It’s better to be at peace when driving, regardless of what the roads throw your way.

Remember, it is always better to be safe than to be sorry. Nobody can predict accidents, and such expenses are high and can put a dent in your bank balance. Take up a policy which gives YOU peace of mind, be it a third-party insurance or a comprehensive insurance. The whole idea of insurance to make you feel safe and secured.


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Trade Logo displayed above belongs to Dewan Housing Finance Corporation Limited and used by DHFL General Insurance Limited with modification under license.
Coco (By DHFL General Insurance) is the Trademark used by DHFL General Insurance for it's digital platform.