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BW Businessworld

Difference between Comprehensive and Third-Party Car Insurance

Here are some important differences between them that can help you choose the insurance plan that suits you better.

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COVID-19 shook the world over the last few months. Now, with the lockdown being eased out at different parts of the country, people are gradually getting back to work and commuting more often for essential work. The fear of the pandemic has led to more people buying private vehicles and preferring them over shared or public transport. When people are choosing private vehicles for safety reasons, getting insurance for the vehicle is equally important. New vehicle owners and prospective buyers must know what kind of insurance should be taken based on their needs and usability.

There are two types of insurance— comprehensive and third-party motor insurance— to protect vehicles from small or big damages and losses that may occur from unexpected mishaps. The main difference between third-party and comprehensive insurance is in the coverage they offer. While third-party insurance only covers you against third-party damages and losses, comprehensive car insurance will cover for your own damages along with third-party liabilities. Here are some important differences between them that can help you choose the insurance plan that suits you better.

  • Coverage: Third-party insurance only offers coverage for third-party damages and losses due to an unexpected accident or collision, when you hurt a third party, his/her vehicle or third-party property. Comprehensive insurance, on the other hand, is extensive as it covers damages and losses to you and your own car along with that of the third party. For example, if you face damages due to natural disasters like floods in the city, your comprehensive car insurance will cover it.

  • Premium: Third-party insurance is the most basic insurance, and the premium is standard and pre-determined by the IRDAI based on your car’s engine capacity and hence costs lesser. But, a comprehensive cover may cost higher as the premium is based on many other factors, such as the city you drive in, your car’s make and model, and of course, the add-ons that you opt for if any. However, In spite of the higher cost, it will offer a larger coverage than third-party insurance.

  • Limitation and advantages: Both the options protect you if you accidentally hurt somebody on the road or damage someone’s vehicle/property. However, third-party insurance does not cover damages to your own car. While comprehensive insurance may be slightly more costly, it protects both damages to your own car and third-party damages as well. You can also benefit from an NCB (No Claim Bonus) during car insurance renewals for every year that you do not make a claim.

Additionally, there are some factors that needs to be taken into consideration while buying an insurance. Depending on the car’s age and usage, you should decide on taking third-party or comprehensive insurance. For instance, if you are not planning to use your car too much, then third-party car insurance could work. Else, it is recommended that you go for comprehensive car insurance. Also, choosing the right add-ons and checking the IDV (Insured Declared Value) of the car  will help you select the right insurance.

Many people prefer third-party insurance as the Motor Vehicles Act madates it for driving legally on Indian roads and considering its low premium. But a comprehensive plan will give you an additional level of comfort as it provides complete coverage and gives the option of adding other riders for better security.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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car insurance

Vivek Chaturvedi

The author is Head of Marketing, Digit Insurance

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