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 standalone third-party car insurance scheme. In India, insurers sell both comprehensive covers and standalone third-party covers. While comprehensive motor policies cover both personal damages and third-party liabilities, standalone third-party car insurance cannot be used for own personal damages.
What Is Comprehensive Car Insurance Coverage?
A comprehensive policy, as the name suggests, offers overall protection against damages to both parties involved in an accident. This scheme is extensive, and it covers damages to car, theft, legal liability to third-party, and 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.
Without a comprehensive insurance cover, you risk paying from your pocket for expensive repairs of damages following an accident. Comprehensive car insurance in India is often costlier than standalone third-party insurance cover. However, it provides a lot more benefits to the insured compared to standalone third-party covers.
Comprehensive car insurance often 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.
Essential Components Of Comprehensive Car Insurance Policy
A comprehensive car insurance policy is the highest form of protection you can buy for your vehicle. It is always recommended to have comprehensive insurance even though the law does not mandate it. With a comprehensive insurance plan, you can be rest assured that the potential losses due to accidents are easily taken care of. Some of the essential components of comprehensive car insurance are as follows:
- It provides protection against damages from accidents, even if you are at fault.
- It provides end-to-end protection for a vehicle even against theft or damages caused by natural disasters.
- Add-on covers like zero depreciation and engine protection are also available along with comprehensive insurance covers.
- No additional premium is required for covering third-party liabilities in the case of accidents.
Reasons to Upgrade to 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 windstorm, hail, hurricane, tornado, etc.
- Damage to a 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. There is no specific limit on the liability coverage for injuries or death of a third party. However, liability coverage for property damages sustained by a third party is capped at Rs.7.5 lakh.
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
One major difference between third-party insurance and comprehensive insurance is the range of protection offered to you and your vehicle. While a comprehensive plan provides multiple protection covers for you and your vehicle, a third-party cover is limited to offering protection against the claims of a third party. 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.
- Expense: A comprehensive cover is more expensive than a third-party cover since it provides coverage for a wide variety of damages/injury/loss.
What Insurance Cover Is Right For You?
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. In the end, choosing the right insurance cover comes down to your specific requirements. If you own a new, high-end car, it is a good idea to have a comprehensive cover that offers maximum protection for your vehicle. You can also choose additional covers like engine protection to ensure that your vehicle is well-protected. A standalone third-party cover could be opted for old vehicles that are no longer in prime condition.
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 a third-party or comprehensive insurance that meets all your requirements.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017