There are several key factors that come into play when you have to choose a car insurance scheme. One such point of concern is deciding whether to choose a comprehensive car insurance scheme or a third party car insurance scheme.
What is Comprehensive Car Insurance Coverage?
A comprehensive policy, as the name suggests, offers overall protection against damages to your car that are the result of incidents which is unrelated to an accident/collision. This scheme is extensive and it covers damages to car, theft, legal liability to third party and cover for personal accident cover. The policy coverage can be further improvised by opting for add-ons like accessories cover, engine protector, zero depreciation cover , medical expenses, etc. This coverage is highly popular since it offers end-to-end coverage and hence ensures less stress for the policyholder.
This includes coverage for: theft, fire, natural disasters like a hurricane or a tornado, vandalism, falling objects, Damage done to your car by animals, civil disturbance, like a riot that results in damage or destruction of your car.
Benefits of Buying Comprehensive car insurance
Comprehensive is also known as “other than collision” coverage because it normally includes coverage for:
- Glass damage (such as a broken windshield)
- Damage sustained from hitting an animal or bird
- Damage from falling objects or missiles
- Fire incidents
- Damage sustained due to severe weather or natural disaster -- such as wind storm, hail, hurricane, tornado, etc.
- Damage to Third party.
Without comprehensive coverage, a car insurance claim cannot be made if your vehicle receives damage that is not due to collision. For high valued cars, this type of insurance is desirable as an additional protection.
Comprehensive Car Insurance Exclusions
- Aging, wear and tear, etc. of the vehicle
- Electrical or Mechanical breakdown
- Damage to tyres and tubes. However if the vehicle is damaged at the same time, liability of the company will be limited to 50% of the replacement cost.
- Damage caused by a person driving without a valid license.
- Damage caused due to drunken driving or driving under the influence of drugs.
- Loss/ damage caused by war, mutiny or nuclear risk.
Third Party Car Insurance
Third Party car insurance offers cover against any legal liability to a third party caused when you are at fault. It covers any damage or injury caused by the insured, to another person or property. A Third Party Liability cover is made mandatory in India under the Motor Vehicles Act, 1988.
Benefits of Buying Third Party Car Insurance
This type of car insurance covers the owner in case of any legal liability owing to death or injury to any individual or damage to any property caused by the insured vehicle. The Motor Vehicle Act stipulates that a third party claim can be made under the categories of "no fault liability claims" where the claimant is under no obligation to allege and prove negligence on the part of the vehicle that caused the accident or "fault liability claims".
Third Party Car Insurance Exclusions
Third party only car insurance policy does not cover the cost of damages to a vehicle or the belongings in the vehicle in case of an accident. It will also not provide cover if your car or belongings are stolen or destroyed.
Difference Between Third Party & Comprehensive Cover
The strengths and weaknesses of these two types of car insurance depends on several underlying factors. It is necessary to better understand these variables in order to compare, analyze and decide upon the right car insurance scheme.
- Value of the car: If value of your car is low, it is better to take third party motor insurance since repairs to damages caused can be managed cost-efficiently and easily. It is cheaper to pay for repairs when compared to paying the high premiums associated with comprehensive cover. However, if the car is brand new and expensive, comprehensive cover is the better option.
- Coverage: Third party insurance covers damages to third party vehicle, injuries caused to other people in an accident, as well as damage to third party property. Some companies charge extra for third party property coverage. This coverage has become a priority these days since cost of repairing damages to the car is high. But it does not provide you any coverage against damages to your own vehicle.
If what you are looking for is coverage for yourself and your vehicle, a comprehensive car insurance policy is what you need. It is a wider coverage plan since it has provisions for third party as well. Comprehensive coverage policy is expensive as compared to just third party insurance cover.
- Expense: A comprehensive cover is more expensive than a third party cover since it provides coverage for a wide variety of damages/injury/loss.
It is better to be safe, than sorry. Accidents happen unexpectedly, and it can heavily weigh on your finances. There might be slight variations in the benefits and exclusions depending on the insurance agency and it is advisable to check the terms and conditions in detail before taking a policy. To attain peace of mind when it comes to getting the right coverage, take out a Third Party or Comprehensive insurance that meets all your requirements.
GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017